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that score makes it easier for them and can eliminate bias. they did not have to know you, but they can just compare you to everyone else and make a decision. that is how that came about. host: last call from tulsa, oklahoma. go ahead. caller: my comment is on college loans. my kids were at the university of tulsa, and i worked there to help them with the loans, but my job was collecting past due loans. part of that job was doing exit interviews for students when they were graduating. they were shocked when they came in to find out how much money they had borrowed during their years at school. they thought, "how in the world can i pay this back?" my thought then, and it still
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is, is there needs to be more education. the students sign on for these and the paretnts are out of it. they need to have more education and before signing. they had no idea. guest: we sadly see a lot of that. there is a big push towards college access. we want people to be able to get to college if they want to, however we need to pay more attention to retention, making sure people can afford to stay in college wants to get there. all of those loans, they can some day pay off by putting their degree to work. there is an entrance and exit interview process in the federal student loan program, but if that is all of the literacy you are getting, you will probably have that rude awakening. this goes back to the idea of a partnership, financial institutions, educational institutions, and in the home helping to teach kids about
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money. host: financial literacy group did a survey for the university of arizona and as people are interested in finding out more, what is your website? guest: and we have a facebook page and we can answer your questions. host: dan iannicola, thank you for your time. 2012 white house coverage, we are taking an event in michigan. we will bring that to you and you can find out more about the presidential candidates in part of the road to the white house campaign to double coverage. for tomorrow's program, politics is the name of the game. at 7:45, a round table will conn carroll and jamelle bouie. we will look at post-revolution in egypt with samer shehata.
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we will finish up with john celock about it next generation elected officials. he interviewed 90 young leaders under 35 years old about why they entered into politics and their experiences. we will have all of that, a look at the papers, york on calls, "washington journal" tomorrow morning 7:00 a.m. we will see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> coming up, a senate hearing on the gulf of mexico oil spill
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clean-up effort. and a look at how companies and nonprofit maintain personal information about consumers. after that, a senate hearing on recent supreme court rulings. and later, a discussion of the dodd-frank act which a discussion with the president of the federal reserve bank of kansas city. sunday, on "newsmakers," senator rand paul talks about the debate over raising the debt ceiling and entitlement programs. that is at 10:00 a.m. and 6:00 p.m. eastern here on c-span. >> thune in -- tune in to c- span on monday. >> at the political level, we are more divided. >> then the dali lama talks about religion, violence, and
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the death penalty. and a discussion of presidential foreign policy. for the complete schedule of programs and time, go to c- >> while the next panel was coming for what it is my pleasure to introduce a fellow member of the alabama bar mr. cooper shadegg. he currently serves as legal adviser to goveor robert bentley of alabama. in that capacity he was elected to serve as chairman of the executive committee of the trustee council. so we get to hold him responsible for everything i suppose. but actually, i am a little concerned that i don't think any of our leaders have a lot of executive power pages have collegial power in this process. prior to joining the bentley and
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a station, he was practicing attorney for the firm of rose and hallwood in tuscaloosa and served as adjunct professor of law at the university of alabama school flock, one of the top law schools in america. i'm proud to say. she is a bar ommissioner for the sixth circuit selected by fellow board members and is currently the member of the alabama state bar foundation board of trustees, member of the tuscaloosa bar where he served as president previously, bachelor's degree in economics he has from georgia tech and a doctorate from alabama. he and his wife live in tuscaloosa and have four daughters. he's been an associate pastor at the united methodist church. thank you for coming. i also note his mother is a good
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citizen my home town of camden alabama, little counity in a great family, and i am proud of cooper to be serving on this important position with governo rent lee. >> mr. shattuck, welcome. >> mr. vetter? >> thank you. as i mentioned, garate graves as you today as a louisianan trustee, and he also serves as the chair of the coastal protection and restoration of 40 of louisiana. that is a state cabinet level position over all of the coastal restoration protection. before that, was honored to have him on my staff serving with me andhe served many members of louisiana's delegation of for several years. he was involved in virtually every water resource coastal restoration related bill going through the process while he was here, very able and i know
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louisianan's interests are in very good hands. >> tha you. >> senator whitehouse? >> i want to recognize dean leinen. as i said it's a better day for the graduate school of oceanography with both a graduate in the first panel and former dean on this panel. he was kind enough to return to the graduate school of oceanography for the 50th anniversary and my timing is right and she was actually the dena of the graduate school at the time my wfe got her ph.d. in marine science from the graduate school. in any event a good friend during her years as the dean of ryland and i'm delighted to have her here. unfortunately we lost her to florida in the meantime, but there's always hope. [laughter] >> dorcy boesch could have been introduced by senator vitter since the sidley native of
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louisiana but now i will take the introduction of introducing dr. boesch connecticut and maryland, part of the university of maryland center for environmental science. he's been a personal adviser to me on many of the environmental issues and he comes to us as a member of the president's obama oil spill commission. dr. boesch examined the causes of the deepwater horizon explosion and recommended improvements to the federal law, regulations and industry practices to prevent and mitigate the future spills. he has a strong background in biological issues and it's a pleasure to have you here once again before the committee. and we have another from maryland, dr. erik rifkin from baltimore. dr. spiegel is the daughter of the national conservation center
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which partnered with the marine laboratories in florida in johns hopkins university to study new technologies for measuring all levels of oil spill contaminants. i think this is cutting edge information thathelps us to better assess the amount of damage that's actually been done. he's been able to develop techniques that are more sophisticated in determining areas we thought were not affected which were in fact affected by the dp oil spill so it is also a pleasure to have you here and also another from maryland on the panel. let's start with dr. boesch and work our way down. >> senators, and very appreciative of the opportunity to testify today. i would ask that revised testimony just changed to include some more specific references. >> it will be in all of your statements will be included in the record. you may proceed as you wish. >> i was actively engaged in their research on the long-term
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environmental issues in the gulf of mexico -- >> is your microphone on? >> [inaudible] okay i was actively engaged in the scientific issues in the gulf of mexico and impact on offshore development before leaving louisianan as senator cardin indicated to head the center for science devices but it w for thi reason. my familiarity with the issues surrounding this bill the president appointed me to serve as one of seven members of the national commission on the deep delete could be the deep water offshore drilling. so my perpectives are those of the commission that i will present today. the natural resource damage assessment was not a central -- not central to our investigation and any case was in a very early stage as we completed the report in january. nonetheless, the commission's report does discuss and offers some recommendations concerning the ongoing inertia. the goal of nrda is to make the
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public school for injuries, natural resources and service relting from oil spill. these injuries are uantified by reference to conditions that would have existed had the incident not occurred. we've recognid on the commission that establishing such a baseline conditions is challenging not only because of the background data and the natural variability but because many gulf coast habitats have been substantially degraded over decades when pressure from the agriculture commercial residential development. to illustrate this launch of degradation i included in my written testimony a simple graph that shows the weight of the wet land lost in louisiana and how it spiked during the 70's when we had a very aggressive program of dredging the canals and but lansford the gas exploitations as well as transportation. the commission recommended the trustees ensure the compensatory
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restoration under the process as transparent, appropriate, and to thedegree possible apolitical by as senator cardin mentioned in the introduction appoind independent scientific auditor to ensure the projects are authorized on the basis of the ability to mitigate actual damages caused by this bill. second, a potential settlement agreement providing for long-term onitoring and assessment of the effected resources for the period with at least three years and for enhancement of the damages beyond the baseline. giving this closely as possible to the employees' current principles that underpinned the regulations to ensure the public resources are made whole to the fullest extent possible regardless of state or federal boundaries. the recent agreement to support the early restoration presents a promising opportunity to begin to restore the impacted resources without reading for years for full compensation of the nrda when damage restoration
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may prove less effective. however, it also presents opportunities for this application and this misallocation of resources. from the beginning, the allocates early restoration equally among the states and federal trustees, disparities, despite the fact there's disparities amonthe natural resource damages. this potentially if this principle continues could compromise the in place and kind principal in a way that can serve the commission. the framework agreement also states that the early restoration projects mu be consistent with the pollution act meeting the criteria for the public coal for injuries from the oil spill. to avoid politically expedient approach is that might miss the mark in terms of compensatory restoration for independent scientific officer or a review board to insure projects are authorized on the basis to
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mitigate actual damages caused by the bill to the degree possible would be prudent to the scientific audit could also independently evaluate the degree to which the natural resource damage of sets to be credited against he damages due to the responsible party for the projects measured, calculated and documented using the best available science to the end of the prisons bill, as i mentioned on top of longer-term degradation of important habitats and resources in the northern gulf of mexico and putting off the coastal wetlands as senator vitter mentioned the recurrent so-called dead zone, the fish populations and endangered species. the commission identified that the restoration effort that is grounded in the responsive to e regional needs and public input would be very consistent with the recommendations that the secretary of the nvy made
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earlier last year. the commission recommended that congress dedicate to this purpose 80% of the clean water act penalties as senator vitter mentioned earlier, his discussion of the legislation the gulf ecosystem restoration task force chaired by the administrator should lisa jackson and mr. graves is developing the gulf of mexico ecosystem restoration strategy due in deceer, 2011. legislation to degette the fund and established the council to administer them seems to me at least to stall in congress in part because the lack of consensus among the gulf states over the scope and permissible use of the farms, and once again come allocaon among the states. as senator vtter announced some r gup will take place as a sign we will see progress on that. the oil spill commission in looking at this issue conclude it was most compelling from the natural perspectives the application of the fund is focus on the ecosystem restoration, and that we argued that the
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criteria should be national significance, contribution to the ecosystem resiliency and the extent to which the natural policies such as flood control the oil and distillate, agriculture, and navigation directly contributed to the environmental problems and require the restoration to thank you very much. >> thank you dr. leinen? >> thank you mr. chairn and members of the subcommittee. my name is margaret leinen, the vice chair of the gulf of mexico research initiative research board three by illsley provost for the environmental initiative for the atlantic university and executive director from graphic. my remarks today were prepared by dr. reva call well, chairman of the gulf of mexico research initiative and one of your constituents, senator cardin. may 2010 bp committed $5 million
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over it in your period to create an independent research program to study the impact of the deepwater horizon oil still on the gulf of mexico. the program known as the gulf of mexico resrch initiative or gri is directed by an independent research board. the research board is responsible for identifying of the research priorities preparing a request for proposals, enabling an open and transparent process for review selecting proposals for funding based on that review and reviewing annual progress for the continuation of funding. although the gri was announced in 2010, it was not until march 14th, 2011 that the master research agreement as signed it. that agreement between bp and the gulf of mexico alliance provides the operational structure or the gri. astated in that research
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agreement, the gri is an independent research program and separate from the natural resource damage but of -- damage assessment process, and bp agrees that the participation of the alliance in this agreement shall not result in a credit against our defense any claims for natural resource damages or assessment costs. so we are independent of nrda. the objectives are to study the impact of the dispersed oil and the ecosystem of the gulf of mexico and affected the gulf states. in a very broad context the fundamental understanding of the dynamics of these events associatedenvironmental stresses and public health implications the gri will support the development of improved oil spill litigation, oil and gas detection characterization and remediation technologies. ultimately the goal is to improve the society's ability to
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understand and respond to even this like this and to understand the effect on the coastal ecosystem with an emphasis on thgulf of mexico. we have established and are implementing peery viewed competitive grant programs that will support research that advance this understanding in five areas. first, physical distribution, dispersion and delusion of petroleum of constituents and associated contaminants such as disbursements under the action of physical ocean a granite process and tropical storms. second, the chemical evolution and biological degradation of the petroleum disbursement systems and their subsequent interaction with coastal open ocean and deep water ecosystems. third, environmental effect of the petroleum disbursement system on the seafloor water column coastal waters, beach
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sediments, wetlands, marshes and organisms that signs of ecosystem recovery. technology development for improved response mitigation detection, characterization and remediation asociated with oil spis and gas releases and fiscal fundamental scientific research integrating reults from the four other themes in the context of public health. the research board has released to requests for proposals, which we call rfp one and three. we anticipate issug another request for proposals later this year. the first of these are announced apri25th of this year. through this program, a minimum of 37.5 million per year will fund approximately four to eight resear consortium to study the effect of the deepwater horizon incident. it is anticipated that each
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agreement will be for up to ree years and will range between 1 million to 7.5 million per year. the research will be conducted through these consortiums and must address one or more of the five areas that we've described. the proposals are being accepted until the 11th of july, and we anticipate announcing the result of this competition august 30th. the second rfp would be for funding smaller research teams. it will focus on individual investigators with up to three co principal investigators. a maximum of 7.5 million per year would be available for those grants, and earlier this year the research board recoized the need to provide short term or emergency funding to sustain some data collection that had already begun over the summer. on june 7 to be announced the
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availability of $1.5 million of emergency funding and are conducting an expedited review of proposals that we have received. we anticipate announcing the results of that competition at the end of this week. so, the gri supports research that contributes to our understanding of how the gulf of mexico was influenced by the deepwater horizon oil spill and how this rich and dynamic environment is recovering. this information will undoubtedly be useful and informative to the nrda program, and we expect it to provide valuable insight for the long-term analysis to the ecosystems since it lasts for ten years. thank you very much for the opportunity. >> thank you very much, doctor. dr. rifkin? >> thank you, ranking member sessions and remaining members of the subcommittee, very much
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for inviting me to testify today. on july 27 def 2010 approximately one year ago, the national aquarium was invited to testify before the senate bcommittee on a hearing titled assessing natural resource damages resulting in the bp deepwater horizon disaster. at that time i emphasized the importance of independent research to address concerns related to our ability to accurately quantify potential chronic damages to natural resources in the gulf. the rationalefor this was and still is based on the concern that the current gri tecum nrda was using the approach which adequately measures small quantities of petroleum contaminants which could of chronic and tax on the a leota, and this is important because small amounts of contaminants in the water and in the sediment for water three process, by the concentration whereby you magnification can increase exponentially. more specifically, in my
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testimony and the written testimony of the other researchers on the panel at at time, suggest device is called passive diffusers can be used t measure low levels of petroleum in order to accurately characterize the ecological risks and impacts. since the last hearing as senator cardin mentioned earlier the conservation center and collaboration with the laboratory and johns hopkins university, has deployed sophisticated petroleum contaminate samples deployed by the usgs a decade ago and these are called -- excuse become semi permanent devices is the acronym for which is spmd. these are virtual fish and provide unparalleled data on low vels of petroleum, contaminants in the water column and sediment pour water on the ta necessary for assessing the chronic impacts. by using these we are able to measure low levels of individual
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pah and in the water impacted by this bill. our preliminary finding supports the detention the data obtained by the devices would incoorated into the concentration models would provida far more accurate assessment of the nature and the extent of the dages of the gulf and the standard approach of using grass samples for water and sediment. samples came from impacted areas off the coast of louisiana, mississippi, alabama and florida. a number of months ago we had an opportunity to meet with representatives from the environmental protection agency so that we could share our preliminary results with the agency and of teen advice and guidance from the search scientists. at our meeting and in subsequent conference calls, we support the view that there was value in using these diffusers to monitor levels of these so-called pah. incorporating the technical suggestions we resigned our method and once again deployed these devices in louisiana as you all know.
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the result of this effort should provide value which can be used to model the concentration of the contaminants in the food chain, procrit empirical data that can be used to ss and quantify the chronic damages and reduce the level of uncertainty when assessing t chronic damages from exposure to oil from the peace bell. the ramifications of the findings should not be underestimated. the vast lardy of water and sediment samples obtained have resulted in the concentrations being reported as non-detected. that is below the analytical detection limit, it equates to zero. so the assumption is made that there are in significant damages to natural resources. however, the value below the detection and predetermine the benchmark value from the samples doesn't mean that spmd are absent present levels which are not harmful. the pravachol supports the use of the benchmark values as a
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basic determinant for the concentrations are organic contaminants constitutan ecological risk. however the benchmarks are not meant to be used or are only meant to be used for screening purposes only. they are not regulatory standards or criteria. benchmarks' cannot be delegated for sites and situations. it can be defended only in terms of regulatory precedent and while the epa and other agencies provide broad guidelines for the assessment of the benchmark endpoints, specific plans are not identified. a meaningful nrda must be able to have economic models to accurately assess chronic damage and injury to natural resources in the gulf. this perspective should certainly apply here given the magnitude and the scope of this bill. in light of the preliminary findings, there are reasons to give serious consideration to expanding these diffusers and impacted areas of the gulf as soon as possible. this will increase our ability
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to assess the causality between the release of oil and the resources and lost human use of the resources d services. thank you very much for your time. >> thank you, doctor. mr. graves? >> ippreciate the opportunity to be here. i serve as the chair of the council of protection restorati of 40 louisiana, the state agcy created after hurricane katrina to be the single state entity charged with coastal sustainability. hurricane protection and other coastal resource issues in the state of louisiana. mr. chairman i think it's important to provide background for the conditions in coastal louisiana prior to this disaster occurring. going back about 80 years ago the federal levees put on the mississippi river was the primary cause of 1900 square miles of the coastal wetlands and these are jurisdictional wetlands just like you or i would have to get a permit for impacting.
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there's been no mitigation done for the 1900 square miles lost today. in addition of the last six years we've been infected by hurricane katrina, rita, gustav and like that took an extraordinary toll on the state. i ll you that because it's different than the other 35 coastal states and territories in the country. it's a very fragmented coastal area with a lot of nooks and crannies. if you measure the shoreline from mississippi to texas, you get about 800 miles that you actually measure the actual title shoreline it's much closer, about 8,000 miles. so, very, very different coast line to protect the area from oil is an extraordinary challenge. at the same time, this ecosystem is very productive. u.s. fish called t most productive ecosystems on the continent. 90% of the marine species in the gulf of mexico are dependent upon that estuary in louisiana at some point in their life for
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survivability. 98% of the fisheries that are commercially harvested in the gulf of mexico, again, dependent upon coastal louisiana wetlands and unique estuary where 90% of the esh water that flows to the gulf of mexico comes through our state. at the same time, it is home to 5 million -- 25 million songbirds and is the largest habitat for migratory songbirds waterfowl. so again, the reproductive area. home to 70 rare threatened and endangered species and the coastal wetlands we've lost play an important role of just in terms of ecosystem services but also in terms of keeping a buffer of it in the gulf of mexico and the populed communities. we saw the impact of that after hurricane katrina. on the economic side, mr. chairman, if you look at the five gulf states that the gdp of those areas if we are compared to a nation that would comprise the seventh largest economy in the world, so much economic
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activity ongoing. coastal louisiana alone we have the top 515 person approximately 20% of the nation's water board commerce comes through the ports and river systems which is hundreds of billions of dolars annually, and at the same time, this area produces approximately -- produces or transfer approximately one-third of the oil and gas consumed in the united states. so from an economic aside, the gulf coast, coastal louisiana is very imortant. the we've had these challenges, historic challenges and we've been able to make progress in recent years, louisiana made unprecedend investment to restore the coastal wetlands and as a matter of fact the geological survey indicated that it appears we've created a price of the two square miles of land while the historical loss rate has been from 11 to 16 square miles on average of the last 80 years. in the last three years we have created up to200 square miles so we are making progress. this oil spill cannot the worst
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place because the productivity of this ecosystem and a can of the worst time because we were rebounding with that reverse, we reversed a loss of the trend. it had been ongoing for decades. to give you a few statistics, 92% of the moderately short lines rehnquist louisianan and even today, 100% of the -- over 99% of the moderately come 81% of blight and about 96% of the very light short lines in coastal louisiana today. over 60% of the marine species diverge, the mammals from the fish collected, there were injured, sick during this bill collected in coastal louisianan. succumb incredible impact in the state. i'm grateful to the response of the nrda side very quickly. bp is to be commended for coming to the table with their checkbook. it's a very important thing to keep in mind. taken to the table with tourism
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fund some safood safet marketing funds and we very much appreciate that. i want to paint the box we're in today. as you very well know better than i do come of this country is facing fiscal challenges to read our state is facing fiscal challenges. there's a $1 billion cap on the light of the trust fund to fund the oil spill response activities including $1 billion cap. we are over $900 million of expenses from this disaster s far, and so the only force of money for us in this case is bp. it's the only source of funding to a large degree to fund response, nrda operations. mr. chairman, i think the creation needs to be flipped over. i think the public should be in the driver's seat by being able to control check but you can control what is in the work plans, how the nrda assessments are conducted. the timeline of the assessment perhaps losing access to the data because of the negotiations on going with fees' work plans. bp, at the same time, hired army
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attorneys of marketing firms, puerto rico campaigns, lobbyists, scientists, consultants and other experts and we have to compete with that. so the states to cut the federal government does come and as long as we are not providing access to the funds needed to truly put up a strong case for the public, perhaps it provides a situation where the public resource from the public trust is not properly represented and that equation needs to be entirely flipped over. three other quick points. i think it's important the question and i know senator sessions you have an extensive legal the crowd. one other situation do you have where the fense is allowed to govern or rein in the plant is in terms of the activities they carry out to exercise the funding, exercise the governance of the funding? i don't know of any other scenario. the process does take t long as has been noted, senator better yet final legislation for the down payment.
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i think that's critical. our citizens have already been victimized, the economy victimized and allowing the ten or 15 your process for the recovery ofthe ecosystem and those natural resources is unacceptable, and for the statutory content to allow for that i think that that needs to be revisited. we need to have accurate science. mr. chairman and based recovery upon that, but at the same time, we can't allow these resources to sit in the state for decades. it's on excusable to the public. the last statement i know this committee has jurisdictioon the clean water act. i represent the states and singing we strongly support the recommendation of the natural commission. e victory and others have recommended the funds be returned to the gulf states for environmental uses. i don't think it's appropriate for the government to profit from the loss in the gulf coast. thank you. >> thank you very much for yor >> thank you, chairman carvin, ranking member sessions, members of the subcommittee, for the
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opportity to speak today. thank you, senator sessions for the most graous introduction. i won't bore you with the statistics for the significance and size of this bill which we all know o well suffice it to say it was unprecednted. it has impacted five states along the gulf coast and the gulf of mexico itself which is one of the united states greatest resources. impact to the gulf and put commercially important aquatic life and endangered or threatened species of turtles and marine mammals, habitat use, migration patterns and the erosion and most significantly the loss of use of the resources. the gulf is an essential habitat for countless species of fish and shellfish contains numerous species of marine mammals many of which are protected or endangered. turtles, marshes that provide feeding and nesting habitat for offshore, near shore and marsh birds and the presence of oil in
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these habitats maylead to decrsed habitat use in the area alter's migration patterns come altered food availability and disrupted lifecycles. they may also cause plants to die, routes to stabilize the soil a thus lead to erosion. and this is not to mention the loss of use of these resources which for alabama like many of the other states along the gulf coast is a significant factor. travel related expenditures and just one of the counties has been reduced by $500 million as a result of the impact of the oil spill. commercial c2 landings as senator sessions pointed out are down 50% from 2,009. the response to this bill from the natural resource perspective has also been unprecedented. the nrda truees secured a billion dollars from bp for early restoration projects in the gulf. the fact that the trustees and the responsible party has even attempted to address early restoration of the magnitude is
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extraordinary. the early restoration alone is larger than the entire restoration process for the exn valdez spill. under the framework for the early restoration, each trusty, the five states and the department of interior will select and implement $100 million in projects with the remaining $300 million used for projects selected by noah and the departments of interior for the proposals submitted by the state trustees. this agreement would not have been possible without the combined and concerted efforts of all of the trustees working together. with so many resourcesnd agencies involved in this daunting but incredibly important task it's essential to ensure continuingooperation and coordination to guarantee that restoration of the natural resources is carried out the benefit of all both from an early restoration perspective and from the long term benefit of the gulf as a whole. in order to manage the early
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restoration process these and continue the assessment that's been ongoing for some time, the trustee council has formed an executive committee. the committee is made up of representatives from each of the trustees. we've also created subcommittees dedicated to specific tasks as part of our charge. each of which is represented by -- each of which is chaired by the representative of the trustees. the executive committees and the committees themselves will work together to make sure that each trustee is represented in an equal and balanced manner to ensure the premiere goals are achieved. the resources and process and early restoration project selection present many challenges given the magnitude of this disaster, its widespread impact and the number of parties involved. each state was impacted differently and ought of unique priorities for the needed restoration as me each federal agency. even within a state or agency there will be different approaches and ideas about how to meet these needs and achieve these goals.
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after all, restoration on this scale has never been done before. all of the different perspectives and ideas have the potential to lead to many disagreements over how best to assess the damages sustained and to spend the funds to restore the natural resources. .. in fairness for the common good about what we will be challenged to eliminate disputes based on
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boundaries and maintain focus on the ultimate goal of restoring the gulf of mexico's natural resources and hope the possible hearty response of. but we have created an experienced a president to aow us to accomplish it that. from the beginni of this disaster is essentiato federal government work together to respond the cleanup process if we could. we begin the monumental task of the fence teenagers to her need for cooperation became pronounced than we have done just that. obtaining a billion dollars for the rest duratn projects that standards were ability to tackle obstacles and 6894. the cooperation between both sides take this unprecedented cooperation and support between the states and federal agents these is likewise an unprecedented in the meet continues. we simply must remain united against the response will party to see that the damages caused by this or are indeed correct
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been restored. the communication and cooperation has been continuously collect for the restoration projects. the full extent of damages to the resources is not yet known all agree there must be a nexus between that was built in the projected in the project. cooperation is not only necessary for the selection of th hijacked, but implementation is slow. it might to report the processes going well. we challenged ourselves to family demanded timeline. our plan is slected in the national center the restoration project in july of this year. even assuming restoration project you select it, negotiated and implemented, decide to process will continue to determine the full extent of resources and our long-term restoration plan. as far as i said must bastardization of this success. we have secured an histori sum of money with the mayor of the tragedy which created the ss and
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the monumental task continues as to what will undoubtedly result in the most widespread and thorough analysis of a significantly large doses to assess ever been attempted. although this is unprecedented. we rest assured th success was to continue such cooperation between the federal government and olives the luxury. everything that made this process will create a president by which cooperative efforts will be possible. >> thank you, mr. shattuck. since i'll be sharing a major blow therefore by definition be her till the end. modern not exist, but my distinguished ranking member to make question and will allow you to to precede. >> thank you.
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mr. chairman, we done this before the judiciary subcommittee unit participated in its ranking on shared. mr. shattuck, thank you for your comment. i am pleased to see the emphasis on collaboration and cooperation and openness in the process. the only flipside of that claim is somebody in charge and can we make sure it happens on time? the party selected projects that would commence before the year's outcome is that correct quick >> were in the process of projects. we hope to have been selected by the end of july to be an demented before the end of the year. the mac in ed trustees, do they vote individually? affect how the decisions are made? >> yes, sir. each trustee, one from each state, one for a noaa and the department of interior noaaand the department of interior noaa
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and the department of interior. we'll move forward with negotiating with assets for those projects. >> a fundamental question on the fed to process, to what extent do you can to do the tustees -- to what extent do you consider that the process to make the region entirely whole or is it just a part of a aquatic >> it is just a part unfortunately. it addresses only damages to our national grease versus and that's a fun. the damages of alabama houses income of her example, are muc greater than that though many damages be sustained or tag to allow for national grease versus a loss of use of natural grease versus a visit to process this address economic losses for individuals, businesses are the data itself. do not i know governor mavis was
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very clear on that in his report, which is really dealing, i suppose, more with the oil spill i cannot damages but eventually had to be paid under the oil spill act, the team noted this section outlines a proposal for congress to create any new off coast under the act and which would work to facilite environmental restoration and economic recovery and attempt to the health issues the. is that what you understand? that will be the next project that can be going on in contemporaneously with this project. be my guest, sir. we hope congress will come later giving the state says mr. graves pointed out some 80% of the funds in my soul ultimately be
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assessed to address all of the losses, whether environmental or economic. in fact there has ben some language of the legislation i've seen proposed giving states a certain proportion might date. most of the money icing on the legislation will be based on overall process. is that what the legislation say . >> this accident should not have happened. i feel very strongly that the responsible party no matter where the subcontract to her were responsible for damages and they are responsible to the last dollar of their corporate
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existence as far as i can turn. i think they've moved forward in this $1 billion they think were not legally required to produce this in. is that correct? >> i thought that was a positive step on their behalf. i sustained an unprecedented damage insides that this will end i would know that i am very unhappy that there is not the kind of capping mechanism already can start date, that you would not be welcome in the would have had to shut this thing off shortly to happen. mr. radley on the part of the commission, mr. rifkin, was that the commission usurp done with mr. riley? will come me testify.
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month or so ago that there now has be designed a cat that can be put up over any blowout late day sun that would any matter be be able to capture that. is that your understanding? >> yes, that correct. therare two industry groups that develop that capacity. and if you remember th controversies over the permit for reoffending the deepwater chilling, a large part of the demonstration to meet these requirements was to demonstrate that they have this deep water containment capability. selected those two groups develop that they have the capacity of side effect. take the assessment was at that point granite but permitting.
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>> that had the capacity. we have 90 we have 90 a, almost 90 days the pouring thereally thing mostoncerning. mr. chairman, i do think they've learned a tremendous amount from this process. the united states is benefited dramatically a production of oil gas from the polls. any the oil and gas for our economy, jobs and growth. i hope that we will be able to continue it. we have learned from how to remediate me think we've learned how to use top if it ever were to happen again and frankly should not have happened the first time. but i do believe we have the pability now to shut it off.
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hopefully the gulf coast area is ready to go forward in the future. we want to fix their economic problems that have been severe and will want to look at this as a not virginity as they know you share nfs meant, a baseline and future projection for a more environmentally positive environment on our coast. thank you for participating in allowing me to participate in this hearing. >> thank you mesengersessions. >> really think learned a lot from this incident from the statusf our baseline research along our coasts and oceans. senator victor was very eloquent and violet on the subject of how far behind we are in t stock assessment and how dated most of
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those are in areas in which coastal flding and weather event and increasing social novels and all of that arafat and wh c happen ong the shores and to develop -- development capacity when these to be taken we seem to be way behind on later such studies. her physical oceanography we seem to be -- have a far from robust baseline in terms of current and temperatures. if we are going to address the issues we face the longer i goes, how much do we need to improve our baseline and awareness of what is going on out there and what are the best methods to do it? upper right across the table.
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this is a generic question. dr. boesch. >> i couldn't agree kumar. we need better information batter ocean to make good decisions about it. since the commission did focus on the goals, i make just a few comments. first of all, we were shocked to see that it industry moved into deepwater over the last 20 years, really quite spectacular new technology. it was not the investment where government and understanding that environment. so at a time this is taking place, theinvestment in studies of the gulf of mexico environment were actually declining. to redress that, we recommend not only for oil and gas development, but for all kinds of energy developments around our coast, whether it's oil and gas in the alaskan arctic or wind power in the atlantic, we should have a capacitor capacity since we were just talking about
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energy issues to understand the environment. so our recommendation is that there should be a really modest fee if you will, recognizing the federal deficit problem to the industry, much like it would have a severance would pay for appropriate regulation in this daddies to support that going forward so you would have a project will support base to sustain those studies. one final a nasty note senator whitehouse, there is a geat interesting move around our country to create a notion of serving as them where stemware became continuous use modern technologies, monitor the state of the ocean. if any part ofur national ocean needs observing system, if the gulf of mexico with great economic engine in oil and gas production, fishing, and again we have reached thursday with an industry in the infrastructure,
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all the platforms that exist to have a first rate, innovative observing system though office decisions going over. >> thank you,.jerry. with respect to the adequacy of our current research-based and much you'd recommend. >> well, i think dr. boozman has spoken eloquently. i'll branch out a little further from there. the lack of ability to understand not only conditions as they stand today, but also the processes that evolved over decades is a real hindrance to our ability to make decisions, whether it is the decline of the winter flounder in rhode island or the increase in diseases that humans get their pc in the wild dolphins in florida we have very
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little ability to go back and understand what the causes of those features are. when you compare this to whether, we understand how much changing weather influences the economy, but i think we have it realized how much that lack of knowledge and lack of big ability about the oceans affects our competitiveness, ability to use resources wisely and our ability to prepare for the changes will see in the future. so, it is a need for baseline. if the need for understanding evolving processes as well. >> i will follow up on these questions with the remaining witnesses, but my questioning time at this point has expired and our chairman has returned, so i will yield to the chairman
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and perhaps the chairman would gi us another round afterwards so we can can tinea this line of inquiry. >> let me thank senator whitehouse. i apologize for having to leave. we have this gem: nomination on the floor of the judiciary committee. so i added to that debate a little bit on the floor. i want to continue on the baseline issue, but i would like to get a few from mr. graves and mr. shattuck s. two what are you believe there are adequate resources available to u.s. trustees to get the type of independent technical support to make the type of ss men tha we have confidence that the best they possibly can. the baseline at the very difficult challenge. no one denies that.
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but having resources available to get the independent type of verification review and technical assistance to me with the very important. deeply trustees have adequate resources here? >> well, there's never enough research is just to be honest, but i think that -- i do't think we've been impacted are the process hasuffered in a dutch mental way at this point and part of that is the economic incentivbp has to see tis process is funded, which sounds counterintuitive, but i think vp wisely has determined that this they do not fund it at this point, they are going to pay for it in one run in a cost even more. so as long as we have the economic incentive, we both benefit in a way because studies are done. but who knows. we aren't finished yet and it
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could be at soe point we are hampered by lack of resources if bp decides to cut them off. our state of alabama has strapped financially. are in dire financial straits and we don't have the capacity to sponsors studies at the gulf of mexico area and resources we have on there is simply not fair. >> mr. chairman, i would say i think our resource issues, and just the layout under the current statutory confines for w this work if we wanted to assess the impact on redfish in the gulf of mexico, we have to develop the work plan for how the assessment would be conduct it and go present at two p. p. and then the's the negotiation process. i'll embllish this to get in a tearful 50 go through. during the negotiation we can say we don't like the area you've chosen. you ought to go to west texas.
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th say well, if you want the money, you need to do it unless texas. so you're in a very difficult situation bcause of the box i try to describe her they were mr. shattuck discarded there's a billion dollars cap on it will spill liability trust fund were close to hitting and so bp is the only funding source. if you wt cess to those dollars, you have had the negotiation and i have to agree to fund it. >> doctor trained doctor trained to come it seems your come it seems your rommendations for do with that by suggesting meanies to be this independent scientific auditor available to verify that in fact we are using independent judgment here. elaborate on that and whether you think we are implementing a recommendation. >> i think having such independent assessment is valuable for a number of
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reasons. first of all for the public confidence that everything is being done all the way around. secondly, as we begin the restoration effort, there is going to be a requirement to make sure it's mr. shattuck indicated that this nexus between the damage restoration to the degree possible is there and that is -- having the independent evaluated and judged as importuning because a matching message indicated their feisty speech with her independent -- their unique problems and it purchased a restoration of sign. the end of the day they have to meet that standard. so that' it becomes a problem is we want to court the adjudication of this, not only between trustee and responsible party, but by third parties who
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make hypothetically coming in a well, the money bp gave you was that used to redress this damage. it is used for some other way, so it should be coted again the amount bp is responsible. fraught this reason, the most important reason is to make sure what we do with restoration this affect you this week be. that independent evaluation is important. you asked the question to the agencies and they do have lots of technical experts. of course thtechnical experts work for people within the agencies. having someone independent, a group in the pen as real value and accountability to the process. >> are just absurd this is a similar issue that came up at our first hearing that the process of self has an inherent conflict because the funding source and the desire quite frankly to have a cooperative relationship with her responsible party.
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he can save time and save uncertainty and get existing. on the other hand you need to have the independence to move in directions you think you need to. mr. graves can you raise a very important to us to the selection of this site is critical to the assessment. so i'm not sure we've quite cut me a. i think there is a real commit it on behalf of trustees to get independent scientific information that the funding sources and processes of his challenging and you don't have the adequate design of permission, it's hard to make an accurate assessment. i think dr. rifkin come you're provided with substantial upon technology new click to see ba is at least using the information you've made available and i hope you will be successful will be able to get an accurate assessment of the current image.
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have you had any further indications from bpa? >> first of all, i'd like to see the methodology where he is and was developed by the usgs agreed to kick out and has been used by agencies for many years. but this is a uniquely scientists came up with recently. it is however not being used as part of this have to process. epa has acknowledged the value in using these devices. since everyone is talking about sending, it's difficult to obtain nding, eher from bpa or noaa or other organizations that were in a position that would ve limit data which will be much to kate t insignificant. what is current they been used in this have to process and very significant and attempting to quantify chronic damages in the fault. but again, very limited on what we can do because of lack of funding. >> senator sessions.
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>> thank you, mr. chrman. i appreciate the opportunity and i don't think i have another round of questions. i believe it was an excellent panel. it is indeed an excellent panel. we are beginning to have a congressional response to the damage the gold at 15. we work our way through that, hopefully sooner rather than later in a thank you for the leadership. senator boxer, are chairman of the full committee has also given a good bit of her tim and attention and her leadership can help us lead to a successful conclusion. >> i concur the. i think it is focused from the beginning and try to get the right and down into nevada's quickly and completely as we can. senator boxer has been encouraging to set committee chair to move forward on the issues. another white hous is >> i want to give remaining but
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stitching to answer my earlier question which had to do with what i perceive to be the inadequacy of the baseline research and if you agree that is a problem, what can we be doing nationally to improve it. it can, not just specific to the calls come up including the coast. >> first, the question if i'm not and it is a difficult, complicated issue. a sign for an attack such as sarasota bay is diferent than the baseline currently on parts of the coast of louisiana and alabama because the previous st. my point of view in order to gain adequate baseline, which is critical, the right information needs to b obtained periodically and monitor periodically so when is periodically so when is comment that baseline is there. it's, the baseline is there. it's too late after the one today that's about where i was doing. really strange is kind of defense in place for this bill
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hasn't existed, which in fact i not scientifically useful because that is not the area were going to be looking at. so ithink the agent he is responsible for collecting data shares speethree any to continually develop and monitor certain water bodies such as the gulf. if there is an utter disaster this would be available before concerns after this post though. >> thank you, senator. i ten pretend to be experts in various fields of my job, but i certainly know the limits of my expertise. if i were asked a question i think one of the first things i would do is e-mail mr. boesch and ask his. if it's okay with you, i prefer to respond in writing. >> sure. and i am a scientist either, but i think there is a finite.
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you know, dsasters like this give us 2020 hindsight vision in the would've been great to have a better baseline, but we have to work with what we have. and what we learned there would be great to have the work since the baseline study throughout the country just in case something like this happens again. again, i know you will battle it limited research says they reenters assignment islands of how much can we afford to do verse addressing more immediate plans and that is a risky endeavor, one that economics might enforce upon us. >> and clearly a good deal of this research is done at the state level to write in rhode island to be the coastal resource management count votes for instant. and states find their budgets slaughtered. it's hard to imagine this will improve and the environment in
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the connect cuts. we need to find new and lasting forces of sending so we are not as ill-informed about the actual status of the ocean and kos and in many reects were flying by and and i appreciate the testimony of other witnesses. the only other points i would like to raise briefly hasn't come up yet and i don't know if it is a problem. there is a concern when you get to a major incident like this and you have a response to te parity that is pretty evident and there's a lot of money at ake, one of the first things they do is go in and buy up all the science, put as many scientists as they can under contract with whatever it takes to get them and then they can go out which ones they want and the
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other one they thought about their science more or less. have you seen that a problem then is that the to attend to? think it's a good and mr. graves for that. >> senator, that's the an issue. everything we were interviewing back in may to some of the consultants and other experts, many were conflict without, either by pre-bell contracts are certainly a big rush by the responsible parties to pick those folks up in it is absolutely been an issue. thankfully one of the major areas were it will to recount an agreement with the federal government. but i think it is an issue. >> again, let mehank all of you for your testimony and work in this area. this is a continuing interest to this committee and its oversight responsibity. you see we've got to get this right.
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the stakes are very, very high for all of us. it affects our entire country, not just that directly impacted regions. so we've got to get his right. we need to learn from how we handled previous environmental damage areas and we need to make sure that we can justify the process at the end of the day has been in the best interests one of the encouraging signs, let me just point out the point that you raise, dr. boesch doublet than the long-term issues looks likeit is moving forward their sensitivity that the final assessments include monitoring to make sure that we carry a the intended restoration make the. looks like we've made progress since their first hearing on the issue raised immediately that the ecma for a long time to come it may not be quite as well
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defined by the time agreements are reached. seems like a sensitivity among trustees to make sure kludged in the long-term solutions. let me again compliment all of you for your wo and i look forward to continuing to work with you. but that, the sub committee will stand adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] [inaudible conversations] [inaudible conversations]
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>> coming up, and look at how companies and nonprofits maintain personal and permission on consumers. after that, a senate hearing on recent supreme court rulings and with corporations and of later, in discussion on the implementation of the dodd-frank act with the former tarp inspector general. >> tomorrow on "washington journal," and look at the latest developments in congress in the 2012 presidential campaign with conn carroll and jamelle bouie. also a discussion on egypt and the middle east with samer shehate. e talk with john celock talking about the difficulties
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with leaders under the age of 35. tomorrow here on c-span. >> rand paul talks about the debate over raising the debt ceiling, entitlement issues, and programs at 10:00 a.m. eastern and 6:00 p.m. eastern. >> now a look at how companies and nonprofits maintain personal information in the effectiveness of loss in maintaining privacy. remarks from sony and epsilon that would require companies to notify customers if their information is stolen. both companies experienced a recent securities data breeches. this senate meeting is about one hour, 20 minutes.
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>> this hearing will come to order. this is the third on consumer privacy that we have had in this committee in the 100th of congress. as i have repeatedly emphasized americans often unaware of but the vast amounts of the intermission collected about them and then used often to their detriment. i have focused on the need for companies to provide everyday consumers with a clear understanding of what information they are collecting, where the information is going, and how it is being used. i have also asked companies to
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give consumers an easy win for them to stop those collection process these. -- processes. i do not think this is a lot to ask of companies making a lot of money that comes off of a consumer's personal information. it should not be happening in america. this is the new cost of doing business in america, and people need to understand that. governments do not subsidize what companies need to be doing to protect privacy. poll after poll shows americans are concerned about the loss of privacy and that americans do not know what to do about it. i have had endless meetings and in my state, as i am sure the other senators have had, and it is my intent as chairman of this committee, and i say that clearly for all to hear, to change all of this. i want ordinary consumers to know what is being done with their personal an affirmation and i want to give them the
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power to do something about it. one click, no information collected. under my bill, companies would be obliged to honor that request. senator kerry has also introduced a bill, 799, the commercial rights act which is a comprehensive piece of legislation that governs many facets of all this. it is a very good piece of legislation. other members of committee have voiced a strong interest in private matters. these provide the basis for building bipartisan consensus to do so. about this.
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today's hearing is also about data security -- bipartisan consensus to do something about this. we are reminded of this every day in the headlines. but the recent security breaches at citibank, sunday, and epsilon show that companies are vulnerable to cyber attacks to compromise the safety of americans. i am not concerned about the breaches, but what happens to american people as a result. i am concerned about the breaches, too. when criminals break into a database and steal credit card numbers, social security numbers, e-mail addresses, they can use this to commit identity theft which can have devastating consequences for the victims. that is why senator pryor and i have introduced, once again, s- 1207 did breach and notification act.
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this will impose an obligation on companies to adopt a basic security protocol to protect sensitive consumer data and would further require these companies to notify the affected customers in the wake of a security breach, the cost of doing business in the new world. the bill would also require greater transparency for something called data brokerage industries, not one of my favorite subjects to think about. these companies amassed vast amounts of data on consumers', sell them to other companies for marketing purposes, make a lot of money, and most people do not know they and exist. -- do not know they exist. there is a broad consensus that data security legislation is necessary. there is a cyber security
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proposal in order for this bill to be ready for floor consideration as a part of the largest ever security effort, i will work with senator pryor and my colleagues to make sure that this works out. i now call on senator kerrey. we do have some votes at 11, so we will be currying. >> mr. chairman, i will try to be very quick because we do have about five votes coming up. thank you for holding this hearing and i thank you for the meeting we held the other day to discuss not just our bill but the entire approach of the committee. a pledge to work with you as closely as possible as we try to find a broad based and hopefully consensus approach to the challenges of this issue. what we are discussing today is the ability of people to control or have some impact on the way profiles about them, digital
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profiles, or multiple digital profiles, are compiled on almost all of us. then they are sliced, diced, traded in the marketplace were many people, as you have just mentioned, not in control what happens to them. we are also here to discuss the need to establish uniform standards for the security of the private networks that hold our information. when i talk about privacy, i am talking about the ability of people to exercise choice and control over how their information -- how their information -- is collected, used, and distributed. data security is a subset of that issue about how companies can secure the information they collect on people and what they need to do in the case of a security lapse. both of these are serious matters. when a company is hacked and the
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affirmation of hundreds of thousands of their consumers is taken, the individuals whose information is revealed are obviously exposed to the rest of the hackers whose stoic using them permission in any number of ways, but particularly to harm them. the company that is had this hurt by being exposed to reputation of damage and harm relations with customers. establishing uniform procedures for how to react in a case of a security lapse and increasing incentives for having a strong security procedures is, i think, and necessary goal for the data breach legislation that you and senator pryor have introduced. a security requires rigid requirements, alone, will not give people authority over how information is collected were used. data security is only one piece of the overall privacy puzzle. after working with senator mccain and others for some months on this issue, you
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mention the legislation, mr. chairman, that was introduced, and i appreciate your comments. we need to find a way to meld the various approaches that are out there. we need to build a consensus within this committee, and i agree with you in order to be able to protect people. beyond the accountability and security, i think the legislation that we have contemplated will give people meaningful and specific explanations and control about how their information is being collected, used come and distributed as well as, and pour in, and the power to opt out of those practices. i think senator rockefeller's approach is a good one, a strong one, an important one. it is one component of it, but i do think that beyond that, we still have to do with the question of choice over how your information is managed, even if
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you do consent. i think that we'll put forward is a comprehensive bipartisan proposal as a starting point. mr. chairman, i think it is critical to work with you, senator kay bailey hutchison, senator snowe, and others in order to bring more people to the table, and i look forward to doing that. i do want to point out that, at the moment, it is in the center of this debate and there are a couple of polls where we have major companies, intel, microsoft, ebay, hewlett- packard, as well as consumer advocates represented by the consumer union and others who are helping us to try and focus this in the right direction. finally, we have expert agencies represented here today, the ftc, the department of commerce, and have all been doing what they
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can to protect americans using the legal tools available to them. while using their ability to convene stakeholders and experts while educating themselves and consumers on the changing practices in this rapidly moving and ever evolving world we live in an -- that we live in. the fact is that they do not have all the tools necessary which is by this discussion is so important. i look forward to working with you, mr. chairman, and in making sure we have a complete picture of what is going on in the market today and from which we can draw the best conclusions about how to proceed and have a smart based on commercial privacy protection put into law. i think you for focusing intently on this important issue. >> thank you. senator schumer? >> thank you, mr. chairman for holding another hearing on this very important topic.
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i appreciate that comment and i agree with senator kerry's characterization that it security is one subset of consumer privacy which come is itself, a very broad topic. on data security, there seems to be broad support among industry stakeholders, consumer advocates, and members of congress for a national standard. it is certainly an issue that congress is likely to address in the near future. in recent years, there have been a number of high-profile data breaches affecting consumers nationwide. establishing a single federal standard for notifying victims of data breeches and protecting the demint permission is something that it which should consider seriously. i look forward to working with the chairman and other members of the committee in hopefully addressing this in reconstructive and bipartisan manner. on the broader issue of privacy, however, i am not sure there is yet the consensus autobus protect consumers or whether a budget solution is, indeed, the best motive for doing so.
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before congress considers comprehensive privacy legislation that would have a significant impact on businesses large and small and on consumers, i think we need to thoroughly examine this issue and make sure we do not provide a solution in place of a problem. i am excited to hear from witnesses today on what is an issue to consumers and what expectations are regarding privacy and what, if any, real harm has occur from on-line data collection and how to address such arms. in the world rarely -- where millions of people voluntarily share personal and permission on web sites like facebook and twitter on a daily basis, i am not sure exactly what consumer expectations are when it comes to privacy, but i am sure that different consumers have different expectations about privacy. i am also not sure who is best suited or even qualified to make this determination. should the congress? should it be the federal trade commission? neither?
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perhaps industry and consumers should set the standard by mutual consent. these of the issues that i hope we will carefully examine, and i am hopeful we can make some progress on them today. my colleagues have introduced legislation in this field that is very rigid very well- intentioned, but i am not sure that will fully considered the unintended consequences that could be attached to these proposals. the internet and the communications marketplace of florida and fueled a tremendous growth in part because of excessive government regulation which is not yet occurred. american innovation in this field has far outstripped the innovation that is occurring in other places including europe are much more extensive regulation currently exists. the engine that clearly has changed the way we communicate and do business, very much for the better, and we should be better -- we should be mindful about proposing regulations that could harm future innovations. i am sure no one on this
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committee was to break the internet or limit the on-line services that consumers can access in order to avoid fundamentally unintended consequences. i just urge that we proceed in caution. one brief example, for instance, overly restrictive regulations for online advertising would likely result in consumers' having access to fewer free online services and applications. i'm not sure that we're qualified at this point to make the judgment on what that trade- off ought to be a. i want to protect privacy online and i want consumers to feel comfortable in using the internet, but until we have a clear picture of the harm we're trying to address and have looked at a cost and benefit analysis of any new privacy legislation, but i reservations about moving forward with a legislative mandate. with that being said, there are a number of a dissident on the table but i do find appealing,
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one example being the idea that maybe we ought to consider consolidating privacy enforcement and oversight into a single federal agency rather than multiple agencies. on this and this entire range of topics, i look forward to working with you mr. chairman, other members of the committee, and again i thank you for holding this hearing. i like to ask consent to have a statement prepared by the national retail federation in the record. >> so ordered. i think the senator -- i thank the senator and now turn the -- one of the commissioners of the federal trade commission. and general counsel for the department of congress. three pretty good witnesses. ms. brill? >> thank you, chairman rockefeller. i am a commissioner of the
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federal trade commission. i appreciate the opportunity to give testimony today. vast amounts of information are collected and used by many different types of businesses. employers, retailers, advertisers commentator -- advertisors, data brokers, and others. they have mounting bills, so to tide them over between paychecks, she gets a pay day long. she then goes to the drug store and buys diapers and children's tylenol with her loyalty card. soon after in the mail commission get coupons for children's motrin and an offer to refinance mortgage on terms that seemed too good to be true. that evening, she goes on line to spend time on social and working side. while on-line commissioners as she is receiving ads for
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children's cough medicine as well as more loan offers. could the drug store and social networking sites sold information about our consumer purchases and interest? to the payday lender have sold information about her need for money to other lenders and lead generators, both online and offline, are offering her loans. could the fact she is a new mother be sold to potential employers? the answer to all of these questions is yes. some of the things i described can also have benefits. the mom probably want coupons for diapers, but the vast majority of consumers are completely unaware of that their purchasing history, their particular financial situation, information about their health, and other personal information is sold to date of brokers canal the generators, lenders, insurance companies, potential employers, and others. most consumers are simply unaware of the updated deluca about them -- about the data
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deluge about them. at the federal trade commission, we are focused on solutions that provide consumers with more reformation and more choices about its practices while allowing the industry to continue to innovate and drive. the ftc enforces laws protecting consumer privacy and security, educate consumers and businesses come and engages in policy initiatives. our written testimony highlights are many recent significant enforcement efforts related to privacy and data security. this includes our latest action announced just this week against a company that sold lists about financially distressed consumers to marketers. to settle are allegations, they agreed to comply with the the there credit reporting act and pay a one. dollar million civil penalty.
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privacy and security continue to be front and center on the commission's policy agenda as well. the commission has not taken a position on whether general privacy or do not track legislation is needed, but a majority of commissioners, myself included support widespread implementation of do not track mechanisms. more generally, the commission supports strong privacy protections. and our preliminary stock price report recommended that industry build privacy protections and to the products and services from the outset, simplify choices presented to consumers about privacy, and improve transparency relating to data collection and use. on data security, the commission supports the nafta the federal data security and breach notification legislation. i am pleased that legislation proposed by this committee aims to accomplish all of these goals. thank you for your leadership on consumer privacy and data
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security. we look forward to continuing to work closely with you on these critical issues. >> members of the committee, i welcome the opportunity to be here and discuss how we can best protect consumer data privacy in a digital age. this is an issue that affects everyone. at this committee's hearing on march 16th, the obama administration urged legislation to establish basic commercial data privacy protections for all u.s. consumers. what we recommended then had three elements. the first is a sign privacy protection in the form of a
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consumer privacy bill of rights. adapted from widely accepted fair information privacy principles. the second is for government to convene multi-stickle the processes to encourage the private sector content specific codes of contact that implement the bill of rights in specific contacts. the third is to bolster the federal trade commission's leadership in this field by granting it explicit authority to enforce the privacy bill of rights and grant safe harbor for code of conduct. we are encouraged that members of this committee and others in congress have introduced several bills to address significant data privacy issues. the administration looks
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forward to working closely with members of this committee and congress to pass legislation that will protect consumer interests and provide a businesses and consumers with a clear and consistent set of rules for the road, both within the united states and internationally. our conclusion is a the time has come for comprehensive data privacy protections is a product of the work of the department of commerce, internet policy task force, and the national science and technology council subcommittee that i co-chair. it reflects two tenants. the first is very simply that to harness the full power of the internet we need clear rules that allow for innovation and economic growth while protecting trust and respecting consumer's legitimate privacy expectations. consumer groups, industry,
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leading privacy scholars all agree that a large percentage of americans do not know what information is being collected about them. they do not know how they can control collection. as we established guidelines, we need to avoid a regulatory environment that restricts the innovation and the free flow of information that have been hallmarks of the internet and drivers of economic growth and an expansion of information that stretches the boundaries of human knowledge. they create social and political change. legislation should not add duplicative or overly burdensome regulatory requirements to businesses that already it here to strong privacy principles or that are subject to existing
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sectorial regimes. legislation should be technology neutral. consistent with baseline principles, firm some flexibility to adapt technologies to comply and to adopt business models that use data in ways not contemplated today. the work continues as administration punishes a white paper on commercial privacy. in the department of commerce, we engage with stakeholders on the development of codes of conduct. we will work on data security and work with other agencies to ensure global interoperable it. this is an area where congressional action have said the impact. two weeks ago, and i was in budapest to speak with european data privacy commissioners. i can report to you that
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comprehensive legislation will send a strong message. u.s. leadership could form a model for our partners, help prevent fragmentation of the world privacy laws, and under restrictions on businesses that conduct international trade. mr. chairman, we look forward to working with you, the committee, stakeholders, the ftc, and with other federal agencies toward the enactment of legislation in the field. i ask that my written comments be included in the record and i welcome any questions. thank you again for this opportunity. >> your statement will be included in the record and i thank you for your testimony. >> good morning and a german rockefeller and members of the committee. thank you for the opportunity to discuss the programs the fcc to protect data security. i'm simply pleased to be here
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this morning with two strong partners in that effort, the part of commerce and the federal trade commission. the fcc has decades of experience and lamenting privacy statutes. these include provisions in the communications act to require communication writers to provide and protect consumers against unwanted telephone solicitations. of the same time, increased use of personal data in new applications is raising serious privacy and security concerns. the fcc recognize in the national broadband plan to successfully address these concerns should be critical to adopt and employ it technologies that benefit the economy. the commission historically has focused on three privacy related goals, ensuring that personal information is protected from a cease and mishandling, requiring writers to be transparent about their practices, and enable consumers to make informed decisions. these goals remain our primary
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focus as we implement the communications act to directly impact privacy. for example, section two under 20 to the communications act requires telecommunication carriers and interconnected but -- interconnected voip provi ders on call information. they have addressed the handling and use of cpi. pre-texting is where and authorize the third parties try to get a handle on information. there have been concerned about minimum notice standards, data sharing rules, and notification law enforcement than consumers in the event of a data breach. in the last six months, the commission issued 28 warnings of apparent liability for
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violations. because of our active enforcement and education efforts, but section to order 22 is now well understood and a number of consumer complaints has declined steadily. 338 and 631 also reject personal information. they establish requirements for satellite and television subscribers. the requirements include clear and a conspicuous notice about the collection and use of a subscriber's personal data, limiting the disclosure of personal data, and a remedy for those who suffer. working in parallel with the ftc, the fcc adopted do not call regulations under section 2027. since 2009, we have issued nearly 150 warning citations and other actions for do not call violations. the fcc and the ftc also collaborate on on wanted
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wireless -- unwanted e-mail messages. the of unforced section 705 which prohibits unauthorized interception of radio communication and unauthorized disclosure of radio communications. of privacy andrt information security and we're a partner of online initiatives to help consumers guard against internet fraud and identic up. the ftc and is a member of the national initiative for cyber security in formation partnership led by the department of commerce. just yesterday, we have a commission on location-based wireless services and the issues that they're raised. this event data and information from wireless carriers, application developers, and business and academic leaders about trends in the use of location-based services, best practices, and what consumers
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and practices should now -- consumers and parents should know. we heard about the many potential benefits of location- based technology as well as the challenge is to educate consumers to protect privacy. we bring to these issues the accumulated expertise as well as expertise about new technologies and services and protecting privacy is a necessary part of providing communications services. it is part of the mandate to promote a healthy marketplace that meet consumers' needs. thank you for the opportunity to testify today, and i look forward to your questions. >> we will proceed to the questions. as for myself, they will be rather rapid. we do have a vote at 11:00. that is very disconcerting to me. the majority leader failed to check with me about the convenience of the commerce committee, so i will do the best that i can. i will ask these fairly quickly.
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commissioner brill, we have introduced our bill. what are your thoughts on that? quickly. >> the commission supports strong federal legislation dealing with data security and breach notification is just like this bill. this bill does satisfy the requirements of such a strong protective bill. >> thank you. it gives the federal trade commission rulemaking authority to require companies with large databases to adopt security protocols to protect consumer data. do you think companies are doing enough to maximize production? >> companies can do more. we have brought many did security cases and have investigated many more. we are not seeing cases that are close calls. these are cases where companies
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are falling down basic security measures, sometimes not even following their own security procedures. yes, companies can definitely do more in the area of data security. >> your taken numerous enforcement actions against companies like twitter for not adequately securing consumer information. can you talk about how senator pryor and my bill will complement your existing enforcement's? >> it will complement our efforts a very well. not only does it set forth the basic security processes and procedures, like having an officer focused on privacy, having within companies a process to deal with security, but it also gives us a broader rulemaking authority which should be very helpful. most importantly, from my perspective, it gives a civil penalty authority which i think will incentivize companies to
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improve their security practices before they ever have to deal with us. >> you are going to keep your building. do not worry about it. the department of commerce has also called for a national data security legislation. any opinions on the bill that we have introduced? >> senator rockefeller, the bill responds to the need for national legislation. one of the important drivers in the area have privacy has been the adoption of a breach notification laws by states. there are now 47 states that have them. in order to make those consistent and drive the issue nationally, there is a need for national data breach notification laws. it is part of the administration's cyber security
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package, and i thank you for your leadership in helping to drive that issue. >> thank you, sir. commissioner brill, how does the ftc work with the department of justice under the current law by do you have a? \ good working relationship to protect consumers in prosecuting criminals? do we need to grant the department just as more authority than it already possesses? >> it is important for the department of justice to have all the tools that they need for those who have been hacking into databases. we would obviously support that having more tools. at the same time, it is critically important to recognize that we cannot catch albeit -- all of the hackers. what is critically important is that it insures that companies
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are going to shore up their data protection practices in the first instance so that they are not effected by hacks to the extent that we can appreciate it -- that we can protect it. we need good, strong programs in place, for instance, through the civil penalty provision. >> commissioner brill, many are already offering the ability to use browsers that have a do not track mechanism, but no one is honoring the request except for one company. that would happen to be the associated press. do you think the ftc can take action against consumers who do not offer -- honor the do not track request? >> if a company promises to honor a consumer's request or an
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ses, then weromies can move a very quickly to the deception enforcement jurisdiction. but the company does not make a promise to adhered to a consumer's request, then the jurisdictional test is a bit more difficult to meet . there is a challenge in meeting that kind of test in this scenario like to describe. it would depend on the facts and circumstances. >> thank you. senator kerry. >> i was struck by the opening comments by senator to me -- toomey. if these questions are being raised, it is important for them to be addressed. i want to use the time, because we have a problem in trying to get a general consensus in passing legislation if there is not a baseline level of
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understanding or acceptance in what we're dealing with. the senator is at another hearing for the banking meeting. i know his staff will help that he sees them, but he stated very clearly the question whether or not this is a solution in search of a problem. in addition, he wondered what the harm is out there. i think it is really important for the three of you to address that very directly. what is the harm? is there or is there not harm? is this where the national response? is it imperative to have a response? if so, can one be constructive without the unintended consequences, harming commerce, the open architecture? i have been on this committee for a long time now, and i have bought diligently to protect the open architecture, net neutrality, everything
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necessary. i do believe it is imperative to have some kind of standard by which people are acting. on what to begin with you, commissioner brill, since you are a regulatory agency and you are particularly in the line of fire. then we will go to communications and then and with the commerce department. what is the harm? is there harm? is it real? is this indeed a solution looking for a problem? >> biogen not believe the focus on privacy protection is a solution looking for -- i do not believe the focus is not a solution looking for a problem. with respect privacy notices, for instance, this is one example in thinking about mobile technology. there have been studies that have shown that apps that young people are using, many of them did not even have any kind of
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privacy policy whatsoever. to the extent that they do have a private policy, it often requires consumers to click through over 100 screens in order to read the privacy policy. this is not reasonable to expect consumers to be able to do that in this modern technological age, so we need to come up with some solution that fits the new technology to give consumers information that they need about how their intermission is being used and give them choices about it. >> senator, there is a problem. we see that in our own section 222. >> is there harm? >> yes, and to give you a concrete example, they came to us and identified the problem of data being insufficiently secure and being taken out on false pretenses and sold
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commercially to the harm consumers. this is one instance where we've conducted a rulemaking and were able to adopt rules to limit and end that practice. the national broadband plan looks beyond the harbor of individuals to the harm of the economy. one key finding of the broadband plan was that consumers, application developers, they do not understand and trust the rules of privacy protection that are built into the system. then the adoption by consumers, the deployment by network operators of broadband technology, will be harmed. we saw this again in the location-based service forum yesterday. consumer groups and industry both agreed that there is a need for clear rules of the road so that there will be an ability and a willingness to use the services for the benefit of consumers as well as industry.
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>> senator, let me say that our support for legislation comes from an extensive exchange with members of the public, members of the business community who broadly across the spectrum of the business community, retail industries as well as technology industries, companies engaged in international trade, they have all said to us that there was a need for government action and privacy protection. it is unusual for a government agency to propose lunch -- a proposed regulation and have a wide spectrum of the business community, as well as consumers and others, endorsed the proposal. that is precisely what occurred when we put out the commerce green paper in december.
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i think what that stands from is the critical need for trust in this sector. there was a policy conference are participated in a few years ago, people from business, government, academia, across the political spectrum. we were given the exercise to identify key risks and the key drivers to the digital economy and the development of broadband. working in four separate groups and looking at scenarios, every single one of them came up with the same risks and drivers. in every single one of them, they independently frame it in the same way as trust. if we look today at the wave of breaches that senator rockefeller alluded to, we are facing a higher risk scenario in which trust is eroding.
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there are a lot of companies that have good practices and understand the importance of trust to their business models and their survival. there are malicious actors and out liars' there who exploit that trust. >> thank you, senator. senator wicker. >> i will yield my time and hope we get to the second panel but with a series of votes demonstrate. >> we want, but we're coming back. we have no choice. >> i understand that, and i yield my time. >> ok, senator ayotte. >> mr. kerry, i understand that the department of commerce has led this internet policy task force. could you also explain for us what the role of the department of commerce it would be? do you envision any enforcement role going forward?
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i am pretty clear as to what the ftc and fcc's is. >> sen. ayotte, no, we do not envision enforcement role. ftc is a critical policy maker and the enforcement authority over a broad area rather than specific regimes like communications and health records. we believe that that role should be strengthened. the role of the department of commerce is as a convener, a policy leader for the executive branch. it is important that the executive branch has a voice in the process. that we be part of the debate as we are today. we've worked closely with the
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ftc in developing policy in this area. we will continue to do so. >> thank you. commissioner brill, i wanted to follow up -- i know you share a history -- >> exactly. >> so welcome. i wanted to ask about the enforcement peace, for example, the proposal for the do-not- track legislation. particularly when we get on areas on the kind of technology, given that the changes we see in the technology field, a, how would you anticipate that the enforcement mechanism would work for something like a do-not-track registry, number one, and secondly, do you have any concerns that the do-not-track
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policy could take away some of the tools that consumers have? there have been some studies that show that this could harm online advertising. i wanted to get your thoughts on those two issues. >> sure. just be clear, it would not be a registry. but we're talking about is the technology-driven solution that would be generated through a browser companies or advertising networks themselves or advertisers themselves. in terms of enforcement, we do want to see a strong enforcement component, whether it becomes a mechanism or mechanism set up by industries itself, or whether it gets set up through legislation. the key component in the enforcement mechanism is that those who receive messages from consumers about the choices that they are making will honor them. once we are short either through self-regulatory mechanism or legislation that the receipt of a header or cookie or one of the bech -- or whatever the technology is, when
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they was it that message, they will honor it, then we will have enforcement tool. that is a critical piece, and something we are looking to see happen in the industry-driven efforts that are under way. your other point about could take away benefits -- there has been discussion about whether an overwhelming number of consumers would participate in the drive away, the free content available on the web. my view is that actually, what will happen is that consumers will have much more trust in what is happening on the internet if they understand that the choice is available to them to make a granular choices about what will happen to their information, how it will be used and collected. i don't expect we will see a whole lot of consumers often into the system, choosing to
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participate. but what it will do is it will, i think, just engender a huge amount of trust that will actually cost the industry to fight even more. -- to thrive even more. that is the critical component that i have not heard a lot of discussion about. >> just to be clear, in terms of issues -- for example, the do-not-track issue -- you envision that this could be implemented by industry as opposed to in congress. one of the issues in terms of the implementation is for us to come up with a solution that will work in applications. it is a difficult task, to come up with those solutions. >> it can be done by industry. i have been 8 particularly vocal proponent of industry -- i have been at the particularly vocal proponent of industry participating in a self- regulatory matter.
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it has been slow. since we started making specific calls for do-not-track, industry has moved and there has been significant progress on the part of industry. i am worried, though, that we might not be able to get all the way there because of the way the industry is structured. advertisers and ad networks are disparate. there are lots of them. until we get them to uniformly agree that they are going to participate and under consumer's request, i am not sure that the self-regulatory mechanisms can work. i am worried about the way it is structured right now, the industry's structure, as to whether we can get away there. >> thank you very much. >> thank you very much. before i get to senator klobuchar, we have a major problem to work out here.
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there are five of votes that are starting at 11:05. i am trying to get it moved to 11:10, which means we could spend another 15 minutes here. we have another panel. we have senator klobuchar, senator pryor has just walked in. now, you can decide what you want to do. my recommendation would be that senator klobuchar, you ask your question, because you have been here awhile. senator pryor, whose subcommittee is all over this, is extremely important. but somebody has to sacrifice. what we need to do is let senator klobuchar asked a question, at it responded to quickly, we call the other panelists, let them give their testimony, and then we submit questions in writing and then all scrambled to the senate floor to vote on heavens knows what. is that acceptable? it is not to you, i understand.
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is that acceptable? >> ready to go. and thank you very much, mr. chairman. this issue can create divides, but we all know that there is some line in the sand here. for me, when you order books on the kindle and they come up with recommendations of books similar to what you ordered, that is fine, actually helpful and not harmful. on the other hand, when you hear stories of companies that compile what they call "sucker lists" of consumers that may be susceptible to different kinds of fraud, that is a problem. one of the things i wanted to ask you about, commissioner brill, is children's online privacy protection act, and unfair and deceptive conduct clause. it is not clear what regulations prohibit sharing of information on mobile phones. for example, if there is an application geared toward adults that has no user
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agreement or state privacy policy but shared vacation and other mobile information with the third-party advertiser, without taking in sent from the user, are there any enforcement mechanisms that the ftc can use? >> are you focused on children or mobile? >> no, this is on the mobile. >> if the application does not have our privacy policy, and it is correcting geolocation information, that is your question, is there something we can do about it? we are, as i mentioned a few moments ago, in a world where we are no longer potentially dealing with deception, because they are not -- they have not said anything that they are not following through on, and rather, in the realm of unfairness. it depends on the circumstances, how they are using it. we might be able to make an argument that the way the
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location was used might be unfair. there also might be the argument that failing to have a disclosure to consumers about the way in which geolocation was used, if it harms the consumer, would also be unfair. but it is a tougher task. >> back to the children's issue. under the children's online privacy protection act, companies offering websites services intended for children under 14 are prohibited -- under 13 are prohibited from collecting information. i think is a good provision, but is there any practical way for the ftc to distinguish between websites and online services? >> the children's online privacy protection act applies when you have a website that is either directed at kids or a web site knows is collecting information about kids.
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my kids, is kids under 13 -- by "kids," it is kids under 13. we look at the totality of circumstances. are there carton's being used? we look at issues in the mobile space. where is it being sold? what part of the app store is it in it, the part for kids or a different part? those other factors we look at to find out whether a website or mobile application is focused on children. in terms of whether or not a general audience website or application is collecting information about children, if the website actually receives information from a teacher or parent, that there is a particular kid involved, they obviously now. we also do undercover work. we go on line, can we are 13 or 12 or 11 and the websites collect information. >> one last question, to mr.
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kerry. i have been working on this cloud of computing bill, as you know. one of the issues here is that we are trading partners internationally. we talked about this before in judiciary, but the need to establish a sub is a gritty and cross border data flows and -- birds. cybersecurity and cross flow -- across the boa -- cybersecurity and cross the border data flow standard. >> one of the key tenets of what we are trying to do is establish global interoperability so that companies can trade, so that data can reside transparently in different locations in the file. we try to bring the global privacy standards closer
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together, an important part of our support of comprehensive legislation. >> thank you. we are now on this rather quickened pace. i thank all three of you very much. i want to introduce senator begich. i will explain this to you on the way to a vote -- [laughter] how you have been abused. the second panel, mr. scott taylor, vice president of hewlett-packard, stuart pratt, presidency of consumer data industry association, ms. ioana rusu, consumers union, mr. tim schaaff, president of sony network entertainment international, and mr. thomas lenard, president and senior fellow of the technology policy institute.
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at's say it is 20 minutes the maximum. our purpose here will be with the time remaining to us, which is not yet determined. 20 minutes maximum for all five of you to give testimony. that is a challenge, but you are exceptionally bright and well educated people, so you should be able to meet it. we will start with you, mr. pratt. the questions will be submitted from the committee members to all of you. >> chairman rockefeller, members of the committee, thank you for the opportunity to appear before you today. my name is stuart pratt, -- >> we know that. get to the point. >> whether it is cut tourism
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efforts, locating a job that has been kidnapped, preventing a violent criminal from taking a job, or entering the soundness and safety of lending decisions, our software and analytical tools are critical to how we manage risk in the country to protect consumers from becoming victims from the island and white-collar crimes. but these kids some of the examples in the record and skip to the key points. i think this committee has a tremendous opportunity before it today. first of all, it can fill an important gap in current law by ensuring all u.s. businesses which are not already subject to data security for personal information are in the future. cdia is on record for securing personal information and we are pleased to have this opportunity to affirm this position again today. second, congress can complete good work of 48 states which have enacted data bridge
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notification laws which make sure consumers are treated in the same way, no matter where they live. cdia is happy to support such an enactment, and where such information has been stolen or lost, consumers exposed to significant rest. new law regarding data secured and bridge the petition should be designed to align with current laws which are already robust and effective. members are financial institutions under the gramm which bliley act and are subject to put standards to standards. it isn't for the new law not interfere with or alter the sick are rules and enforcement guidance that has evolved over a decade of the north and actions, examinations, and regulatory guidance. the same principles apply to the other sections of the economy. this new law should fill gaps insuring all of sensitive personal information is protected.
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similarly, where sectors of the economy are subject to a federal data bridge data petition standard rule of law, regulation, or rules, these sectors should be exempted from a new federal standard. in the past, bills have tried to eliminate the problems imposing duplicative duties. however, these exemptions often fall short by using in compliance rather than subject to construction. getting these right is important as the new duties for data bridge securitization enacted as we work for creating duplicative law. congress must avoid creating a 51st state law in acting duties for securing personal information and data bridge notification and is only a success if it creates a true national standard for u.s. businesses. this is especially true for small businesses. finally, we would exclude the committee to exclude privacy issues which are not a big to data verification.
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cdia members live with a variety of laws that regulate their business today. we urge this committee and congress to not comment of privacy concepts such a provision would propose to regulate entities to find information brokers with the duty to secure personal information and provide notices to consumers rather has been a breach of their data. as discussed more completely in my written testimony, privacy can interfere with the development of data. let us move on a clean data security dative securitization bridge which will notify consumers by establishing a national standard and insured u.s. businesses can comply, which is their high school. -- highest goal. >> thank you. ms. rusu. >> thank you, chairman, members of the committee. i think we can all agree that technological advances over the past decade have created
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incredible, fantastic tools for consumers to use. however, privacy is still important and relevant today. even in today's age of extensive sharing, if you would agree that every piece of liberation about them should be available to everyone for any conceivable purpose. in fact, in a may 2011 consumer reports poll, 82% of respondents were concerned customers could be passing on their personal information to third parties without their permission. such consumer distress is a barrier to the adoption of new technologies, which in turn, arms commerce and discourages innovation. consumers union supports the data security bill that are the focus of today's hearing. the commercial promise to bill of rights put in place standard that would give consumers more control over their personal information. the bills from work is rooted in fair practice principles such a timely notice about data collection, accuracy requirements, and the principle of privacy by design.
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we support the bills focus on sensitive information, including the commission about health and religious affiliation. company's handling such information must first get a consumer's consent. this would protect a young woman suffering from bulimia, for example, from wearing that joining it an eating disorder support for, her personal information will be sent to a marketer for with loss. while the legislation leaves out an important foundation for better privacy practices, we also look for to strengthening the measures so it provides consumers with even more transparency. we support provided consumers with an opt out, not only for unauthorized use of information, but also for its collection. we would also like to see more authority granted to the ftc to update the definitions in the bill. in addition, we are concerned
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the language of the provision could force out state laws that seek to percent -- protect consumers beyond the intended scope of this bill. consumers union also supports the do not track on my act as an important part of online privacy policy. public support for a do not track option is particularly high at this moment. according to the same poll i mentioned before, 81% of respondents agreed they should be able to permanently opt out of internet tracking. some industry actors have already developed to not track tools directly into browsers, but unfortunately, marketers can and to ignore their choices. this is why this is a much bigger component. consumers union believes the do not track online at and the commercial privacy bill of rights act, taken together, would give consumers strong privacy protection and meaningful choice in the way their information is collected. current protecting consumer privacy also means supporting
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data from authorized creases. this would protect consumers by requiring strong data security practices as well as notification in the event of a breach. we are particularly pleased with the provision that instruct information brokers to maximize the accuracy and accessibility of their records, and to provide consumers with a process to dispute information. the consumers union would prefer that consumers are notified in any event of a breach, similar to the notice of breech lock for the in place. however, we urge this committee not to further weaken notification requirements. thank you for your time. i will be happy to answer any questions you have. >> thank you. mr. schaaff. incidentally, i want to apologize to everyone for this travesty of scheduling.
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it is not fair to you, for us, for people lined up to get into this hearing. we are all being shortchanged. we usually make one vote a day. now we are going to have pipe -- five votes and it is quite incredible and totally unfair to everyone in this room. >> thank you, chairman rockefeller, members of this committee. my name is tim schaaff. i am president of sony network entertainment. we employ approximately 700 people in five offices around the state. i am chiefly responsible for the business and technical aspects of sony's place dish network and qriocity service that allows consumers to access movies, television shows and the games. millions of our customers were recently the victim of an increasingly common crime of
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summer attack. regarding the attack on sony, initially anonymous, the underground group associated with last year's wikileaks attacked called for a massive denial of service attacks against numerous sony sites in retaliation for sony bringing an action in federal court to protect its intellectual property. in that time, hackers infiltrated the petition network and online entertainment system. so network entertainment and sony online entertainment have always made concerted and contended -- a substantial efforts to improve the data system to utilize. rehire respected and experienced cybersecurity firms to enhance our defenses against mile of service of attacks. unfortunately, no entity can force -- can deter every threat. we did tell the time line from the first discovered the brief -- breach. i will not go over the details
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today. over this time, we've got a keen sense of responsibility to our consumers. we shut down the networks to prevent another rights activity. we notified our customers promptly when we have specific, accurate, and useful information. we thank our customers for their patience and loyalty and addressed their concerns arising from this bridge with free identity protection and insurance programs for u.s. and other customers, as well as a free subscription to games and other services, and we worked to restore our network with stronger security to protect our consumers interest. let me address one of the specific issues you are looking at today, notices when data breaches occur. law and common sense call for companies to investigate breaches, gather the facts, and reported a loss as publicly. if you reverse that order and issue they can speculate statements before specific information, he said false
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alarms. we therefore support balanced didn't reach legislation. by working together to enact meaningful cybersecurity it a decision, we can eliminate the threat posed to all by simultaneously moving on data bridge policies and legislation, we can ensure consumers are powered with the necessary tools to protect themselves from these cyber criminals. >> thank you. mr. lagarde. >> thank you, members of the committee. i appreciate the opportunity to testify. i would like to stress two points. first is the importance of having reliable data and analysis for policy making in this area. second, privacy and security are different things and should be done with sec produce separately. the privacy debate has engendered strong opinions but little analysis.
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in order to make informed decisions, policy makers need facts about the practices prevalent in the marketplace. to my knowledge, the most recent systematic data on website promise to practices are from 2001. in addition to basic data, the benefits and cost policy proposals need to be evaluated to ensure they improve consumer welfare. for example, some proposals are likely to reduce the value of the internet as an advertising medium, both for firms and consumers, and will reduce the amount of content supported for all users. the principal benefit is to make these trade-offs explicit. some proposals also may not produce the intended results. for example, the idea for a do not track mechanism comes from the telemarketing do not call list, which has been popular, but the effect could be different. do not call produces a unwanted solicitations. do not track could have the
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opposite of that with consumers receiving a greater number of ads that are less well targeted to their interests. >> could you retreat -- repeat that sentence? >> to attracted them to opposite affect with consumers receiving a greater number of ads that are less well targeted to their interests. security prisons different issues. people might be comfortable with the intended uses of the reformation the word about unintended uses and what their information to be secured. identity that is their primary security concern, although recent data show total lead of the fraud in 2010 was at its lowest level in eight years. regulating the collection, use of information does little for firms to determine this an excessive control of the commission may increase the risk of a debt of the theft by making it more difficult for sellers to determine the particular as of the potential buyer. there are two general spots is
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to data bridges in fraud. improve security to reduce the likelihood that such events will happen, and notification of the victims in the event that they happen. both are addressed in current legislative proposals. data breeches and then in the frauds are extremely costly to the firms involved which gives companies a strong incentive to spend money on data security. it is, therefore, unclear government action in this area is warranted. incentives for notification maybe [unintelligible] would make people better off is therefore an unfair question beard wanted to be concerned about is that if consumers receive more notices, they may become afraid to do business online. this would be an unfortunate response because on-line commerce is safer than offline commerce. perhaps the most of the the benefit of federal data
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security and a breach of notifications would be pre- empting the patchwork of state laws. for that reason, enacting a carefully crafted federal bill could protect consumers. the briars and security and data security debates are extremely important to the future of the digital of economy in its division in the united states, but unfortunately, they are taking place largely in an empirical of vacuum. without better data analysis, there is no way of knowing whether proposals currently under consideration will improve consumer welfare or not. thank you. >> thank you, mr. taylor. >> members of the committee, h.b. commands the committee on its approach to balancing consumer privacy interest worth of business reality of an internet-based economy. i would like to talk about technology trust and privacy and how they converged to create new opportunities but also a set of challenges. we are living in a time when
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reliance on technology is ever increasing. our business and personal lives are starting to emerge. consumers are more dependent on mobile devices and they have a growing expectation that companies are going to be accountable steward that respect and protect information that we protect, use, and maintain. hp believes our ability to succeed in the marketplace depends on earning and keeping our customer's trust. hp takes active steps to implement organizational capabilities throughout the country. we believe companies need to do more, and when asked or requested, to be able to demonstrate their capacity to of all the obligations and commitments they make to that end, we have built internal programs that houses our privacy twill which integrates all of our commitments into a tool that helps to guide our employees. this tool looks at privacy requirements, risks, and other considerations. that helps ensure we are able
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to hold every employee is accountable. the concept is known as privacy by design, and is one of the fundamental elements in the legislation put forward. hp is a strong proponent of the omnibus legislation. we believe it is time for the u.s. to establish a comfortable, flexible legal framework that works to protect consumer privacy. we believe consumers are expecting it, businesses need it, and the economy will be better for it. while we possibly been effective corporate self regulation, one of the innovative programs as outlined in the bill, the patchwork of state laws and statutes in existence today confuses customers about their production in any given context and also forces companies to contend with differing and often conflicting regulations. this is why we support the initiatives, which would set a
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national pre-emptive standard. we believe the adoption of new innovation depends on companies acting in an accountable and responsible manner that anticipates consumer expectations. no one is served by a lack of confidence in the security and privacy of personal information. at hp, we believe consumer transparency comes from trust. we continue to urge policymakers to examine ways to establish baseline federal legislation that will clearly articulate expectations for all organizations. as more and more services are delivered through mobile devices, such as applications, it will become even more important we have a consistent baseline standard that will strengthen that chain of accountability. and unify the beverage and regulations currently in
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existence. simply stated, hp recognizes consumer trust is a volatile commodity that must be upheld through programs and leadership. this can establish a unified baseline standard for organizational accountability as well as improved consumer protection. we believe it is a win for consumers and for the industry as a whole. >> thank you. that was clear and well presented. i want to apologize once again. this has not been the order of what has happened. you have a committee hearing on a subject as important as this. many of you have come far distances, and you give your testimony. let me give you some solace. getting written questions from members, and then you having the chance to answer them at
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length, or not, at your choice, sometimes works better than us asking questions and then the five-minute rule of messing everything up. so take some hope in that. otherwise, accept my apologies. please. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
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>> today, a senate hearing on a recent supreme court rulings dealing with corporations. later, the discussion of the dodd-frank act with the president of the federal reserve bank of kansas city.
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>> sunday, senator rand paul talks about the debate over raising the debt ceiling, spending issues, and entitlement programs at 10:00 a.m. at 6:00 p.m. eastern here on c-span. >> this fourth of july 3-day weekend on c-span3, we will visit the smithsonian museum of natural history to learn about an expedition to circumnavigate the globe. former first lady laura bush on her time in the white house, planning a presidential library, and her memoir. then a panel including press secretary mike mccurry discusses jfk's relationship with the press. get the complete schedule online. >> now, a hearing on several
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recent supreme court court rulings involving class action lawsuits. one of the topics -- the wal- mart class action case and the degree to which court decisions to favor business over consumers. this is about an hour and 25 minutes. >> good morning. this morning, we are going to highlight several recent supreme court decisions. we want to examine the impact on hardworking americans. in my view, each of these decisions give corporations additional power to act in their own self interests and each limit the ability of americans to have their day in court.
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in these tough economic times we are facing around the country, it has a particular interest because consumers and employees rely on all laws to protect them from discrimination. they relied on the courts to enforce those laws intended to protect them. unfortunately, i believe these protections are being eroded by the supreme court in the last 75 years. last week, five men on the supreme court disqualified the claims of 1.5 million women who spend nearly a decade seeking justice. perhaps more troubling, they told those women that wal-mart could not have had a discriminatory policy against all of them because it dead last
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at the decisions to the branches of its local stores. five justices have made it harder for corporations to be held accountable under our civil rights laws. earlier this month, the same five justices gave corporations another victory by sheering them from accountability even wednesday and knowingly lied to their investors. some had said the decision provides wall street companies with a license to lie. others have said it is a road map for fraud. if you lie to your investors, as long as you follow the guidelines of the supreme court justice decision, apparently you can get away with it. whichever phrase you used, the decision allows companies to
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design new ways to avoid accountability. by all talent investment schemes and corporate misconduct. two months ago, the supreme court held that companies could take advantage of bills and other contracts to bar steamers from bringing class-action lawsuits. binding mandatory arbitration makes the constitutional right to a jury trial and the due process of our constitution guarantees to all americans because the arbitration had no transparency, and no injuries, and no appellate review. some of these cases were discussed with a few examples of how the court's recent
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decisions would hurt individual americans and benefit those dead engage in misconduct. over the past few years, the american people have grown frustrated. some corporations are considered too big to fail. recentreme court's decisions may make some wonder if some corporations are too big to be held accountable. we have a situation where they are too big to fail, too big to be held accountable, and there is a real concern in this country. many are feeling that the justice's view plaintiffs as a nuisance. decisions have been praised on wall street that they are hurting hardworking americans on main street, so i thank the witnesses for being here today.
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before we start, i will yield to my friend, senator grassley. >> thank you very much. everyone should agree that all americans, whether you are an individual or a business, must have confidence that when they appear before a judge they will receive a fair adjudication of their claims and defenses. everyone knows how strongly i believe in constitutional duties to conduct oversight of all other branches of the government, even including reviewing the federal judiciary. but that review must be fair and objective, so i am concerned given the less than objective title of this hearing. i know the title does not make up the testimony, but some might ask whether some conclusions have been reached before this hearing even started.
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what businesses it deserved a from congress is a fair hearing, protecting their rights, and a measure of predictability of the law. the united states was founded on the principle that all persons should receive equal justice under the law. americans believe the most fundamental requirements is that a legal system be staffed by justices who are fully committed to in partially adjudicating the cases that come before them. this believe it should be of no surprise. a solemn preledge of impartialality. those are more than just pleasant-sounding words. the fundamental principle of
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equal justice under the law has its origins in the foundations of western civilization and the birth of the concept of representative government. today, the concept of equal justice under the law and an impartial judiciary are at the heart of our legal system and our democratic system of government. contrary to this principle, it was seen that those who accuse bias want justices and judges appointed for the cases it based on the empathy that they have for certain groups ofr litigants'. the appointment of judges because he or she possesses empathy or sympathy for certain categories of the dickens over others is a misguided, unwise, and it is very contrary to the fundamental principles upon
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which our judicial system is based. under the ethical rules governing federal judges, judges are required to consider the controversies before them in partially and must disqualify themselves if their impartiality can be reasonably questioned. a judge whose rulings are influenced by empathy of violate his or her oath and the canons of governing the conduct of judges. when it comes to judging empathy, it is only good if you are the person or group that the judge has empathy for. in those cases, it is the charge, not the law, that determines the outcome. that is a dangerous road to go down. individuals with legitimate claims should have a chance to make them, but not all individuals have a legitimate claims. it appears those who attack the supreme court and favre business
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when to change our system. under their view, it would seem that legal disputes are nothing more than a popularity contests decided by the loudest voice or the largest advocacy groups, not withstanding what the law provides. our founders predicted this and knew that judges and justices would be subjected to these kinds of attacks. that is why our founders provided for life tenure for justices in article 3 of the constitution. under our constitution and the statutes, judges and justices must apply the law in partially and call cases as they see them without regard to the status or political views of the litigants. that is our system. it works and it is the best that mankind has ever known. thank you.
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>> thank you. our first witness this morning will be betty dukes. many of us know she is the lead plaintiff in a class action case for. promotions, dukes vs. walmart. ms. dukes anticipated many opportunities. she was hired by wal-mart and was very happy to work for the company. she learned about the family and the vast business empire in the mid 1980's. she was placed on the dean's list at a community college. it made her and her family quite proud parents she had nearly 25 years of retail experience when wal-mart hired her. this may 25, it marked her 17th
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year work work -- working at the walmart store. i was struck by it -- somebody told me your favorite quote. "do not let fear get under your feet because it will carry you where you do not want to go." that is a great quote. we will put your full statement in the record. please, go ahead. >> good morning. i am betty dukes. i am honored to have been invited to speak to you this morning. the supreme court ruling in the case has brought me before this committee today. i would like to share a little of my history as a walmart employees. i grew up in the city of pittsburgh, california, and
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worked at the walmart store there for 17 years. i had worked in the retail industry for nearly 25 years before coming to wal-mart. most of my working career has been in the retail business. from the start of my career with wal-mart, i saw opportunities for advancement. during my 17 years at wal-mart, i have only received one promotion. while working at wal-mart, i received numerous awards for outstanding customer service and other duties performed well. prior to filing this lawsuit in 2001, there was never any posting for management positions in my store. for the first nine years that they worked at wal-mart, i never saw nor heard of any system for applying to get into management. after the lawsuit was filed, i learned that my experience was typical of what other women had
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experienced at other walmart stores. once this lawsuit began, i also learned about the data base that women were paid less than men for doing the same work in walmart stores. rather than bring a claim just on my behalf, i brought this lawsuit on behalf of the women that work at walmart stores in this country. we have evidence that countless members have been subject to the same working conditions and at the same practice as they do with men. all i would hope this suit would permit us to get an order from the court to stop wal-mart from treating women unfairly compared to men. i was disappointed last week when the supreme court blocked us from bringing these claims together in one single case. we have collected a lot of evidence, that women
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consistently received on equal pay and on equal promotions. unfortunately, the supreme court in a sharply divided decision did not allow this case to go forward. women will now have to pursue a smaller class cases or individual actions. we will continue to proceed on the behalf of many women as possible who are not a part of the class. many women will give up because it is too hard on their own. it is not easy to take on your own employer. it is even more difficult when that employer is the biggest company in the world. in this country, there are many betty dukes who want their voices to be heard when they are denied equal pay and equal promotions. for many of these women, i am
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afraid that the court's ruling will leave them without having they due date in court. thank you. >> thank you very much. i am sure that many of those women watching you and your testimony. our next witness is andrew pincus, a partner at the firm mayer and brown. he is well known to the court. he previously served at the department of justice as an assistant attorney general. and at the commerce department. glad to have you here. >> thank you very much, mr. chairman and members of the committee. it has been an honor to appear before the committee today. to assess the impact of the
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recent decision, i looked at the outcomes in all the court's cases involving private plaintiffs seeking damages from businesses. this year, there was a tie. business parties lost in just as many cases as they won. in the cases involving a substantive interpretations of employment law, businesses lost every case decided by the court. i know that some will say business is one the most important cases, but i wonder if there -- if the court had said in retaliation claims under the laws that complaints must always be in writing, i think the reaction would have been this is an outrage and a process requirement that will chill retaliation claims and open the
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doors for companies to intimidate workers. the court had said as long as the actual decision maker in an employment case did not act with discriminatory intent, then a discrimination claim cannot be brought. i think there would be great concern about that. i do think that, in looking at the court's cases, it is important to look at the whole range. turning to some of the cases that have been the subject of discussion, i think it is important to distinguish between legal analysis and policy decisions. of all the cases that we are talking about today, either of laws passed by congress where the federal rules governing court procedures. the supreme court does not ask what all comes our best. rather, ascertaining the intent of congress to use legal principles that the general acceptance by all the members of
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the court. they vary somewhat in how the and this is that they give to some of those principles. it is possible to have a vigorous debate regarding the best way to resolve these issues, but the policy debate is a separate. i think that separation is important. in the wal-mart case, in my view, the legal positions of the plaintiffs that were asserted in those cases departed substantially from existing law. i do not think it is surprising that the court refused to embark on the courses were urged by the plaintiffs. in walmart, the court confronted an unprecedented class action which the majority found a failure of proof that there was a common legal questions in the case. the decision rested on the particular facts that had been deduced in support of
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commonality issues. in janis, the court rejected aiding and abetting claims under the securities exchange act. in this case, is seen to be a pretty clear in tend to avoid those rulings by seeking to avoid a liability with a different label. again, someone who was at led to help another should be a level with the argument the court said it had dealt with that issue twice before. finally, in at&t, calif. in what was really and all lawyer decision had applied a state law rule different from other states to invalidate the arbitration clause in this case. the court said a state can condition the enforcement of an arbitration clause on compliance with conditions that it will turn arbitration into litigation. just as a state could not say we are happy to enforce arbitration
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clauses as long as the perpetrators are 12 people picked off the streets, because that would turn arbitration into a court proceeding, the court said insisting on class action procedures would do exactly the same thing. the court -- the scope of the rulings are going to be debated in hundreds of cases in the lower courts. i think one thing is certain. the predictions that being made now are likely to be incorrect. two years ago, many asserted that a ruling that involved the standard for determining whether a complete is sufficient to allow the keys to go forward in federal court was claimed to have dramatically restrict access to the court, and congressional action was needed to overturn that decision. a decision was just released three months ago finding that in those two years there has not been any increase in the rates of motions to dismiss.
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it was a particular focus of the concerned about the law. just a cautionary word, we do not know what these decisions are going to mean until we see how the lower courts will interpret them. thank you. >> thank you very much. the next witness is professor melissa hart who teaches at the university of colorado school of law. she specializes in supreme court decision making. she was a clerk for the justice john paul stevens on the united states supreme court. professor hart, good to have you here. >> thank you and i appreciate the opportunity to talk with you
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today. i have been asked to focus on two cases in the impact they might have on both access to justice and consequently, on corporate accountability and behavior. these cases are very different in the context in which they arise. one is a consumer case involving a cell phone agreement. wal-mart against dukes is a case involving allegations of pay and promotion discrimination in the workplace. what the law underlying these cases is very different, there are important similarities that the think are relevant. at first and most significantly, both of the cases reflect tremendous skepticism. i think it is fair to call it hostility, to class action resolution disputes by the current supreme court. the erosion of the effectiveness has moved us very
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far from the intent of the drafters in 1966, the current version of the rule. because the class action is the only way to reach many kinds of systemic misconduct, the erosion of this tool insulates companies from any serious risk of litigation from many kinds of potentially illegal behavior. so this change, this is reinterpretation of rule 23 that has occurred in walmart has very serious consequences potentially for cases outside of the employment area as well as within the employment area. . .
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the question was can they put these claims before a decision maker? and so the procedural devices are being put ahead of the substantive law and interpreted in ways that make it hard to get to the substantive questions. looking at wal-mart it's easy to see how rule 23 a, the rule that governs class actions in federal courts by private litigants has from 1966 really until last week been understood by lower courts by the supreme court certainly by the rules drafters as a threshhold inquiry that was not supposed to be a high barrier to pursuing a class action. it was supposed to consider not the merits of the claims again but whether this group of people could put the merits of the claims before the court. in the wal-mart decision these five justices interpreted rule
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23a in a way that actually sets the standards as higher more difficult to meet than the standards that the court had already established in earlier cases for the substantive law underlying these claims. so a class can't be certified but if it were certified it would meet the standards set for winning on the merits. and that's a very troubling turning on its head of the relationship between prurel rules and substantive rules. i think that's a policy judgment. these judgments about how the prurel rules should be used to effect how much and what kinds of litigation gets before decision makers. and this is true in the arbitration context as well. that it is much better made in state legislaturing or in this body than by courts reinterpreting rules that have not themselves been rewritten. a final similarity that i think it's important to note in thinking about these cases is
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that while they are very different from each other they are similar of being typical of the modern world. every single person sitting in this room has signed dozens of contracts. we all agree every day to arbitration agreements that we don't know we're agreeing to and we are all going to be bound by these agreements in litigation. and the question of how the courts interpret those agreements is something that will affect us all. similarly, wal-mart, although people love to call it unprecedented and focus on the size of the company, wal-mart as a type of workplace is in fact the type of workplace that more and more workers are working in. it's a multi-facility, multi-national corporation with decisions made in subjective ways that involve assessment by one super visor of the workers working for him or by one region manager of the workers without a lot of objective standard to that evaluation. i think that in light of the
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way that these decisions might affect people all over the country it may well be time for this congress to start thinking about changing the law, responding to these judicial reinterpretations with new standards that return the original intent of rule 23 and of the federal arbitration act. thank you very much. >> thank you very much professor hart. and our next witness is the senior legal sfello and depdi director of the center for legal and judicial studies at the heritage foundation where he specializes in constitutional law. mr. at received his law degree from the university of chicago law school. we are glad to have you here. please go ahead. >> good morning. the full statement will be placed in the record but please go ahead. >> thank you chairman lay hi and ranking member grassly for inviting me to testify before your committee once again.
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i share with senator grassley the concern that the title of this hearing suggests something of a predeveloped conclusion that the recent decisions of this supreme court will somehow create barriers to justice and will create adverse incentives for corporate behavior. i do not believe that the facts support that conclusion. reviewing the business cases from recent terms of the court leads to stefrl important conclusions. one, the court frequently speaks in business cases not in a fractured voice characterized by the courts' critics but in a unanimous or super majority taryn voice. two, far from creating new barriers, the courts' decisions assailed reject new novel and frequently unsupported theories advanced by trial lawyers to circumvent reasonable requirements which were designed to prevent frivolous litigation and assure due process to all parties. and three, the designer of many of these requirements was none
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other than congress. with this in mind it is worth exploring a couple of the cases highlighted in today's hearing. largely ignored so far in this hearing has been the unanimity of the court determination that the action could not be brought under rule 23 b 2 but was more appropriate if appropriate at all under b 3 which permits broader claims of monetary damages. it is obvious why it is that that claim was brought under b 2. b 3, the certification for monetary damages under b 3 is harder and more costly than under the injunktive relief section and that's the lawyers attempted to shoe horn what were claims for monetary relief into the b 2 setting. the use of b 2 for what is really at best a b 3 claim as tedious as the b 2-b 3 repetition may be creates very
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real due process concerns for members of the plaintiffs' class who are not required under rule b 2 to give adequate notice or to have the option to opt out of the litigation. it also creates serious due process concerns for wal-mart as defendant which would have been forced to litigate in what the supreme court recognized to be trial by formula. this creates gross and unfairs in for the defendant who is titled to raise statutory defenses to individual claims. but perhaps most importantly there are ample opportunities for justice and incentives for good corporate behavior. smaller and better to fund class actions can be filed perhaps one of which the absurdities of the plaintiffs' class not also being accused of discrimination, keep in mind that a number of the supervisors were also women but would have been plaintiffs as the class defined all women who were employees of wal-mart
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would be a good place to start. additionally, individual actions supported by title 7 offer of attorneys fees for prevailing parties would also be available. those who believe they have been injured by wal-mart will have their day in court. the only party who may claim substantial injury in this case is the trial bar. then we move to the janice capital case. this case is yet another attempt to expand the private right of action under rule 10 b 5 but the court has already answered that question repeatly in central bank in 1994 and in stone ridge in 2008 finding it was not appropriate to expand the complid right of action under 10 b. equally important, the court does not operate on a blank slate in this area but on a statutory regime modified by the private securities litigation reform act. central bank was decided prior to congress' conversation of the pslra and congress was urged at the time of the plsra
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to extend a right of action to aiders and abetters. you refused to do so. instead, under section 104 of the act you directed prosecution of the aiders and abetters to the s.e.c. and what is now section 2878 te. there are once again within the context ample incentives and mechanisms to insure justice. secondary actors are subject to criminal penalties civil enforcements and some states allow to seek fines and restitution. these mechanisms are hardly too although. the s.e.c.'s tools to enforce include obtaining injunktive relief, issuing administrative orders, imposing large civil pements on any companies aiding or abetting fraud. contrary to the chairman's statement earlier on, the conclusion after janice is not that if you commit fraud as a corporation you get away with it. as evidence, look to s.e.c.
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enforcement actions between 2002 and 2008 in which it collected in excess of $10 billion in disgorgement and penalties much of it distributed to injured investors. >> these were the actions prior to janice? >> yes. this was 2002-2008. so there's already existing. >> they were prior to janice, prior to the roadmap. i appreciate >> -- the >> authority to exist after janice. >> i appreciate if i might because your time has expired i appreciate your sar chasm and your continuing sar chasm in your testimony but >> i appreciate congress determination as to who should be enforce'sing these actions. >> your whole testimony will be placed in the record. i thank you for being here. i mean that sincerely. the sar chasm not withstanding in your testimony.
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professor cox, joined the faculty of duke law school in 1979 where he specializes in the areas of corporate securities law. he advised the new york stock exchange, the national association of securities dealers. received his law degree from hastings, llm from harvard university professor cox please answer. and also, each of you your full statement will be placed in the record and i should note we may start a series of roll calls and we will work around the time so that each will have a chance to answer questions and to expand on their testimony in a way they want. and i would also note for each of you the record will be kept open so that if you, if there are thing that is come up afterwards that you agreed or disagreed with anything i say or anybody else says you have a
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chance to respond in the record. professor cox. >> thank you very much. >> no principle is more well established than the principle that individuals who cause harm to another prosmly should bear responsibility for that. a quick prusal of the case law and securities laws would show that this is not the principle that applies in the securities areas. let me just review quickly a few cases here. the stone ridge supreme court decision held the following. the corporations whose executive knowingly prepared false documents to conceal customers' daudors that $17 million in the customers' revenues were fraudulent round trip transactions and did so to retain the customer as a client
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are not responsible to the investors who purchased the customers shares at inflated prices or the seventh circuit decision which applied stone ridge and the central bank decision. the president of the newspaper subsidiary who fraudulently inflates the numbers of subscribers and revenues of its subsidiary that he was the c.e.o. of is not libel for those who purchased the parents' companies shares at prices inflated of the president's reporting chicanery having reported into the statements issued by the parent. and my favorite is a district court case from the federal court in utah in which the c.e.o. falsely represented in a letter to the auditor to prevent the auditor from pursuing confirmations which would have uncovered a chain of defaultications and that the auditor issued an unqualified statement only to find out a
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few months later the massive fraud. the c.e.o. was not responsible because of central bank and because of stone ridge. now, the above cases are hardly aberrations as we have to look at what happened in capital. the issue in janice capital was whether an investment adviser issued by janice investment funds was responsible for misstatements contained in the prosspecttuss, a divided 5-4 court held that the adviser did not make any statement in the janice investment fund and therefore got a pass. the court's reasoning for the majority was that the following. that even when a speech writer drafts a speech, the content is entirely within the control of the person who delivers and it is the speaker who takes credit or blame for what is ultimately said. however, the analogy fails. when speeches delivered by a human being then it is one
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thing to identify who the speaker is. but a corporation is not such a being. a corporation can only act through individuals and then can act only through the simbose sis of the entity structure and structures in which the corporation operates. thus, financial courts pass through multiple individuals each of which provides a voice to the inadmat entity. the reasoning of janice capital is that none of these actors makes a statement because in the eyes of the court's majority the statement can only be made by the entity. but of course entities don't speak. individuals do. >> so let me just point out something else here. i have now published ten papers of securities class action frauds. one thing we do there is we took a look at how many times we saw any evidence of an s.e.c. prosecution and we do that only in 17% of our cases which are now 900 settlements do we find any evidence of an
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s.e.c. involvement. not an enforcement action but just a report. 17% of those cases. we also took a look at what gets recovered in those $10 billion and let me tell you, that's one horse, one rata. that is that the private plaintiff and even the s.e.c. admits that they are seriously constrained on what they can recover by way of a disgorgement and a fine recovery. so this is not a fair comparison. this is the janice capital case was not an aiding and abetting case. if you go back to part of central bank that would have been a classic primary participant case. i can give you chapter and verse on that. what is happening with the court is they are per versely interpreting what is aiding and abetting as to exclude individuals from responsibility. we can have an interesting argument about whether the entity ought to pay money in a settlement but we can have no argument over the fact that a person who defrauds investors
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should be responsible. and the result of what we see in central bank, stone ridge, and now janice capital is we give the fraudster a pass. and i see my time is up but my testimony points out that this leads to all kinds 06 per verse results with the result that we are never holding the individuals responsible who ought to be held responsible. and i believe everybody regardless of what side of the aisle you're on would agree to the fact that those who engineer and carry out the fraud and by even the most basic form relation should be responsible and the case law doesn't lead to that result. thank you. >> thank you very much. i note my time in the senate and previous career as a prosecutor i always felt people who did the wrong doing should be held responsible. ms. dukes, we can speak about the legal theory of these
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things, but you are the person who is actually involved. can you tell us what united you and other women employees at wal-mart? i mean, how did you come together? >> what was it that happened? because i think about what justice ginsberg referred to justice scalia's opinions. she said it's intention -- it's focus on what attention what distinguishes individual class members rather than what unites them. what were the things that united you? >> an opportunity to have our voice and our complaints addressed. as to wal-mart's corporation, there are many wal-marts but we are spread apart. it's not that we can come together socially. we come together on the premises that we work on an
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environment that is very unfair in the treatment of its employees. we have many complaints but this is just two that have come forth. we are trying to unite without having to be under the intimidation of losing your job just because you speak out. we are in a very intimidating environment. so this avenue was one that would have allowed us without the fear of rhett bution is to come forth and have our complaints addressed. >> are you going to give up now? >> absolutely not. the best is yet to come. >> thank you. >> you're welcome. >> professor hart, will the wal-mart decision that we just discussed with ms. dukes, is it going to make it more difficult for victims to bring their
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cases? or is this one of a kind case? >> i certainly -- it is certainly not one of a kind case. one of the interesting things that's happened both in court and in the majority opinion and also in the press following the case is that people have emphasized the ways that wal-mart is different from other companies, in particular that it is so big. and it has been suggested that this case was somehow unique. in fact, these kinds of cases, cases challenging the excessively subjective decision making unguided discussion given to managers has been in the lower courts for decades. the idea of a claim of excessively subjective decision making leading to dicrim nation was endorsed by the supreme court in 1988 in the watson case. these kinds of cases have been around for a long time. it is true that they are by their nature class action cases.
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that is what you are looking at that first because you've got a systemwide policy that is being challenged, and because what you are looking at is the range of decisions, the consequences of these decisions, you need the class action device to be able to pursue these claims for a couple of reasons not to get too much into the weeds. but the way these cases can, what the important thing that these cases does is it opens up discovery for plaintiffs to have a better understanding of how the company is structuring these decisions and what awareness it had as wal-mart had quite a deal of awareness of the kinds of decrimthations that were going on. in an individual case that kind of discovery wouldn't be available to an individual plaintiff. and the threat of individual litigation also doesn't lead to self-monitoring by a company one of the most important things about this wal-mart case is that after this suit was filed in 2001, wal-mart started changing its policies.
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it recognized that it was making bad choices, choices that in fact were hurting women. and it started changing its policies itself. that's one of the good consequences of litigation that you lose when you make it be possible to bring suits through this procedural technique. >> but we also hear that, and some would say that there's not a trend here in this court but we have held hearings here on led better sex discrimination case, we have held hearings on age discrimination case. and each of these it seemed that five justices made it more difficult for victims of discrimination to hold their corporate employers accountable. is there a threat going through this or am i reading too much into them? >> i fear that you are not
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reading too much into it. i think that it is true that if you look at employment discrimination cases in the past few years although many are quick to point out that businesses have won some and lost some, plaintiffs have won some and lost some the general trend has been to interpret it to make it more difficult to bring the underlying claims. wal-mart was a procedural case. again, nobody hasr reached the merits of these claims but i think there is a fair cause for concern that because the very high procedural threshhold the court set seems at odds with the substantive legal standards that have preexisted this case the court may in the future interpret the substantive law similarly tightly and said that this may very well be at another case in which the intent that congress enacted title 7 and the civil rights act of 1991 is being ignored in these cramped interpretations
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of the substantive law. >> i have a lot more questions but i run the clock on myself, too. so i run to senator grassley. >> thank you, plitch and thanks to each of you for your testimony. i am going to just ask two of the panel for answers to a couple questions. i would like to have mr. pink cust first and then mr. at respond to this question about your reaction to professor hart's testimony. and i want you to be very specific. >> it seems to me senator grassley that a key part of professor hart's testimony is where she says about the wal-mart's case, it's hard to tell what the contours of the decision will turn out to be as interpreted in other cases. and to me that's a key question as i mentioned in my statement with all of these cases we just don't know how they're going to be interpreted. i think wal-mart is perceived by many an as extreme case because of the size of the
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class and the nature of the evidence relevant -- relative to if large number of decision makers that were involved. and i think there's just a real question about how it's going to play out as the lower courts get ahold of it. >> mr. at. >> i would build on mr. pink cuss' statement and simply say i think part of the difficulty associated with the determinening how what impact it will have is recognizing that it does not foreclose class actions against wal-mart. it simply foreclosed this single omnibus class action, if you will. and so you can continue to have class actions perhaps better defined in which you can raise these sorts of claims, you can bring in the sort of evidence that i think pr fessor hart was talking about that might be necessary to establish the sorts of claims that plaintiffs were seeking to make. but in these particular cases if it's brought appropriately
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for instance under b 3 it permits wal-mart the opportunity to raise the sorts of defenses that you would expect in an employment discrimination case with regard to the particular damages. so in terms of that i'm not sure that i would endorse the doom and gloom. i think meritorious claims will still be able to go forward. >> and in the same ord forethe same two panelists, i would like your reaction to professor cox's testimony and ask you to be as specific as possible as well. >> again, i think it's important to separate legal analysis and public policy. as to legal analysis i think professor cox and i have a disagreement just as the majority on the court and the defenders did about the impact of stone ridge and central bank decisions on the particular issue before the court there. but i do think that what the court ruled in those cases was we are going to be very focused on defining who can be libel
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under this implied cause of action and i think that was especially true after congress rejected private aiding and abetting liability in 1994 and instead gave the s.e.c. authority. and then again in the d.o.d.-frank bill rejected argumented and instead further expanded from what it had done in 1994 the s.e.c.'s power to both bring enforcement actions against aiders and abetters and also to obtain money to deficit into fair funds account for the benefit of people who could prove injury. as to policy, i think we also have a disagreement about whether the law says that there is a private right of action for every wrong. i think it is quite clear that the law doesn't say that there is a private right right of action for every wrong. and the courts have been very leery both in the statutory context and in the common-law
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context to create those things because they recognize that once you move -- once you say inn who helped something do something wrong does someone do something wrong even though that conduct is legal, we are going to hold them libel because they had a bad intent to help the wrong doer you are opening up private liability very broadly because that is an issue that can only be determined after trial. so there is a very significant policy question whether especially in the class action context expanding liability that broadly is a sensible thing to do rather than make sure you have cops on the beat in terms of spanning the s.e.c.'s enforcement authority as congress did. >> mr. alt. >> just briefly i would say, i think it goes in part to the understanding of the proper function. my disagreement of the court. i think the court was attempting to adhere to what it is that congress had told them to do. they believed that in fact congress considered the question of expanding
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liability, chose expressly chose not to do it, thought that the best enforcement agency was the s.e.c. and there's good reasons to think that. there's ample literature that suggests that litigation actually causes as much harm as good. that it actually constitutes in large measure a welleds transfer from one set of share holders to another with the true beneficiary being those who create the transaction costs in the form of the lawyers. and with regard to is evidence that only 17% of settlements studied had any sort of s.e.c. involvement, you go back all the way to judge friendly who talked about the problem of blackmail settlements that quite frankly in a lot of class action litigation the costs associated with simply complying with discovery are so high that it is more cost effective for companies to settle. that doesn't necessarily mean that in those cases there's even particularized wrongdoing.
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so that would be -- i will wram it up there. >> thank you. the time vote senator feinstein and i will stay. >> thank you very much. i am going to be very quick. professor hart because you speak sort of in a layman's language, which i like, i am a nonlawyer, what exactly does wal-mart say on two things. what a maximum size of a class should be? and number two, what is it do to individuals choice with respect to promotion? >> so the one decision doesn't speak clearly to the question of what the maximum size of a case will be. there's much more in the wal-mart decision about what the five justice majority disapproved of in this case than what they would approve of in future cases. i think some areas for concern include that justice scalia refers to the idea that perhaps
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the class would be limited to a single supervisor. that again ignores the fact that many of the kind of policies being challenged in a case like wal-mart are systemic companywide policies not the decisions of a single supervisor. >> stop for a second. so what you're saying is because this is where i am unclear. the company has a policy and a supervisor exercises that policy with respect to promotion. and how much freedom under this case does the super visor have and what level of rights with respect to seniority and that kind of thing if there are any rights does an employee have? >> so again it will depend very much on how the company's policy is structured. in the context of the wal-mart case what the plaintiffs alleged and in this way i think wal-mart is unique.
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it may not be the only company like this but certainly the evidence of discrimination at wal-mart was significant. the gender disparities were really startling in terms of the very large number of hourly employees who were women and then the absolutely flipped very small number of wal-mart managers who were women. and the way that the decision making system was structured to both give individual managers discretion to just pick their friends and at the same time create a series of corporate standards adged corporate culture that discouraged the advancement of women through a variety of policy decisions that were highlighted in the complaint. when the complaint was filed, for example, one of the things that wal-mart used to have as a policy was a requirement that to be a store manager you had to be willing to relocate. it's obvious to a lay person i think why that in our society discriminates quite significantly against women as
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compared to men. like the refusal which again wal-mart has actually fixed in the wake of the litigation but the post, the absence of any posting of management opportunities which meant that it was a tap on the shoulder system which there's lots of evidence tends to favor the people who look like the people in charge. so if you have men in charge you're going to end up with men being tapped for promotions and again there's lots of evidence of how that works. so these choices that wal-mart was making were choices they were making even at the time that they saw the results that they were having. and again there's lots of evidence that wal-mart in fact had the information about the kinds of gender disparities that were happening all over the country in all 41 regions that wal-mart operated and this was not a random thing and yet didn't respond in any way again until this litigation was filed. and so the benefit of being able to challenge this kind of
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employment practice through class action litigation is that it does force accountability. even if the litigation doesn't proceed like right now it's going to have to change its form it led to change just by being brought. and that's so important. >> thank you very much plitch. that was very hex. >> even those of us who are lawyers appreciate hearing in the plain talk. >> yes. we are i am going to leave for the vote but senator white house as he has so many times for me is going to take over the chair and i will be back. thank you all. >> thank you chairman.
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>> sort of like a flying change in a hockey game. change while the puck is still active. i'm delighted to have all of you here and reading the recent series of supreme court opinions actually going back a few years now reminds me of my law school days when i was studying for a ucc exam and as those of you have had the misfor tune of going to law school or the code know it's about the most teedium and boring possible ordeal. and so i'm plow mig way through this immense book and somebody who is a year ahead of me and immensely more knowledgeable said you dent need to worry too much about that. it's actually a lot simpler than it appears. indeed, the entire ucc can be
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sum rised in two words. i badly wanted to know what that was. so i asked what are the two words? and the fellow looked down at me and my little study and he said bank wins. and it's starting to seem a little bit as if a similar two-word prophesy could be applied to the united states supreme court's decisions and that would be corporation wins. and i have two questions that i would like to ask across the panel. the one is at some point in human behavior when actions result in a certain thing time after time after time, it becomes reasonable to presume that there's no longer random effect happening and that there is indeed some intention nalt
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to what is going on. and so my firs question would be to each of you, do you think sweff reached that point at this stage? let me start with ms. dukes. >> let me get a little charity of your question. >> could you turn your microphone. >> let me get a little clarity as to the question that you ask. would you make it a little more clear for me. >> i was just trying to determine if you think that if you were to plot the supreme court decisions on the corporation wins graph, are there enough of them that come down there that you think has independent significance that is beyond just a random variation? you know, there are going to be times when there will be three
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or four decisions in a row that come down in favor of the corporate just in the ordinary variation of life and sort of random nature of things. but after a while it becomes increasingly statistically improbable that what is happening is random as the events pile up and pile up and pile up. and that's true whether you are talking about any area. true whether you are talking about nonhuman events i-start to look for a cause once things no longer fit a pattern. and i'm wondering if it's your observation. if you don't care to comment on it i can go to another witness but we have to point where you think it's reasonable for people to conclude that there's more going on than a random selection and in fact there is a purpose or an intention in the supreme court's actions in these repeated decision that is favor the interests of
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corporations. >> thank you for the clarification. i am beginning to get the impression and i believe that many other americans feel the same way that the supreme court has to makeup is now that it is quite conservative in its opinions. i feel that the supreme court really concerning those five votes that we had that this panel the wal-mart versus dukes case that they are definitely leaning on the side of the corporation. it's beginning to be obvious that if you can get your case before this sitting court, the chances that the more liberal aspect will not survive. >> doctor, your view? >> i don't think so, senator. i think if you look at this term's decisions i think it's really a draw. i think if you look at last term's decisions there were
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some very significant cases. i think there if you look specifically at cases where individuals are seeking damages from corporations, the individuals actually won more than they lost. so i don't think so. and juss 2iss brier was interviewed at if beginning of this term and he was asked this very question and he said i don't think so. he had gone back and looked at the cases from recent terms and compared them from prior terms and really didn't see a difference in the pirtsage of caseses decided either way. >> i think it is a little more complicated than corporation wins all the time. obviously there are examples where corporations lose cases. i do think that if you look at the trend over the past few years it's very clear that the majority on the court, and consistently the same majority is taking a very restrictive view about what kinds of cases it thinks should be permitteded to go into the court and i think that's the most
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disturbing thing that procedural barriers are being set up that are being created as a policy judgment by this majority on the court that limit the ability of people to bring their claims into court. and that really changes our legal system in ways that whether the corporation wins or loses in any given case, people aren't being allowed to bring their cases forward. >> professor. >> i don't think that the facts support that particular trend. and in fact, if you take a look at there's a number of key lawsuits for businesses in the last several terms. if you take a look i think the court is all over the map on preempletion cases, it was over the map in this term. and if you take a look as well, to make that sort of claim and to smear it's just the roberts court touf ignore the fact that a number of these pro corporations involve super majorities, involve decisions written by the most liberal justices.
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>> let me jump to professor cox and give him a chance. very briefly. >> in my security laws i agree with your snamente senator and i will tell you the slig rhetoric where it used to be limited to the ameekcuss briefs is now very well found in cases like bank of australia case and also in stone ridge where the message is aggregate litigation is destroying america and destroying america's competitiveness. i think that is coming through. they don't like these suits. >> my time has expired. senator franken is here and i yield to the good senator from minnesota. >> thank you, mr. chairman and i ran back to the voit and ran back as fast as i could. so excuse me. first of all, as far as mr. alt's testimony, let me just say na i've always been a big fan of sar chasm, i've used it
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a lot myself. >> and i appreciated your sar chasm in the past. >> but it does have its place. and i'm learning bit by bit exactly what that is as i go. so while i have some sympathy for you i think you have been wise to tamp it down since you've been -- and i don't mean this sarcassically. >> mr. pin cust, hour, in a recent let tore the "new york times" you dispargedsar castically the class action lawyers who represent consumers like the conceptions and i was really wondering why you did that given that the average salary for partners at mayor brown is over $1 million i don't think you're in the most credible position to make that kind of sar castic critique. professor hart, i have introduced the arbitration fairness act which would bar
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the use of mandatory arbitration clauses in consumer and employment contracts. mr. pin cust has testified that the court's decision in at&t was correctly decided because it is in line with prior decisions for other justices might disagree. now, while it is true that the case is in line with the decisions dating back to the early 1990s, the history of the act enacted in 1925 i think tells another story. as the dissent in the 2001 circuit city case points out the decisions expanding the reach of the f.a.a. ignore clear legislative intent which is that this was meant to be business to business. so in fact the arbitration fairness act would merely restore the original legislative intent of the f.a.a. these are all technical arguments about legislative history and precedent and court rulings and what not.
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but let's put all that aside and let's set this up for inn listening to f today so you can get a handle on what at&t really did in this case. first they did something that was just wrong. they advertised something as free, a free phone. and it wasn't. california law says you can't advertise something as free and make people pay a sales tax on it unless you say so. so they bought their cell phone -- advertised as free. then they get a $30 charge on it in their bill they weren't asked to pay the sales tax when they got the phone for free that they thought they were getting for free. so yet they now have devised a scheme to prevent people from suing. i mean, no one is going to
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spend time getting $30 back. the only way to do this is to do it through a class action suit. and what this does, what this decision does is incentivize corporations like at&t to rip people off $30 at a time, hundreds of thousands of people, so they get their $3 million. and maybe four people will try to get their money back, that's $120. aren't they just incentivized to rip off customers? isn't that what's going on here? >> is that a question to me? >> yes. that's the question to you. >> i think that decisions like at&t definitely make it easier for businesses to set up deals like this and know that they
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really won't. as you said only four out of every so many customers are going to try to get their money back and i think it is particularly disturbing in this case, i want to comment on something you said was the intent of the congress in enacting the f.a.a. the court focused on the idea that their interpretation was necessary because of what congress meant in 1925. well, in 1925 these kinds of contracts in which millions of people are buying a free phone didn't exist. this is a different world. and similarly the kinds of employment discrimination claims that were at issue in circuit city didn't exist in 1925. the world has changed and the idea that the 1925 legislature was meant to be buying is nonsense so i think this is one of the areas where we are really seeing a misuse of this idea of congressional intent in order to insulate from
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liability companies that engage in wrong doing. >> thank you. i have that legislative response. ive run out of time. mr. chairman, are we doing another round? >> we'll have one other round. it will just be the two of us because i do have another question, which has to do with the fact that in a number of these cases that the interest or the institution that is on the other side from the corporate interest is the jewelry. and the access of americans to the jewelry to redress their grievances. and over and over again as professor hart has pointed out would have erected our procedural obstacles but always making it more difficult for americans to get in front of a jury where particularly where a
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big corporation is the defendant. and i worry about that because my view is that the founders put the jewel jury in the constitution and in the bill of rights in three separate places for a reason. it was part of the structure of government that they were erecting. i believe they understood that as william blackstone had explained the most powerful individual in the state will be cautious of commiting any flagrant invasion of another's right when he know that is the fact of his oppression must be examined and decided by 12 indifferent men. now, the term indifferent has achieved a different meaning since then and it's men and women now. but the point is clear that the jury and the fact that the
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powerful may have to face the jury is an important part of our constitutional structure. it's a particularly important part where money has such way in the executive branch of government, where money has such way in the legislative branch of government. but try bribing a juror. tampering with a jury is a crime. it is protected in the american system of government as our last chance for a reason. to tokeville observed the jury is before everything a political institution. one ought to consider it as a modes of the sovereignty of the people. and in that context, i think there's an additional constitutional structural worry on a country that prides itself on the operation of government when it's the jury being drawn further away from the ordinary americans in favor more of the most powerful individuals in the state. and i wonder if any of you have
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thoughts antirole of the jury. do you believe that the jury was part of the plan of the founders that they set up our institutions of government that it wasn't just judicial, executive and legislative branches but having a jury in there was part of the plan as they have suggested? >> i think there's a lot of history that one of the benefits of the jury can be quite the opposite of what many would here think and that is kind of a temperizing effect on overreaching by both aggressive plaintiffs but also by the government so that there's a rich history about the temperizing effect of ay jury. the other thing is the idea of community standards which are implicit in soach of the law. reasonable person. what is a reasonable person?
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again in my own sort of narrow part of the world which is securities law, we find that roles of juries historically have been taken over by the trial judge. so we don't have the jury being involved and a lot of crucial factual determinations not just questions about whether something is terl but whether there has been truth on the market, sufficiently cautionary statements, a strong inferns. go on adfin itetum that these are now no longer viewed while they're questions of facts they're totally appropriate for a question for the judge and that gets into something of the opening statement by the chairman and that is the question about are we a country ruled by law or are we ruled by individual biases like that? and the jury system is designed to make it more toward the law side and less by the individual standard side. >> if i remember my history correctly, the chapter in which
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the quote about the jury being a political institution, the people occurs is the chapter he hadded something like un tampering the terny of the majority. so i think it is built into that. my time is exiring so i will yield back to senator franken. >> thank you. >> thank you. in mr. pin cuss' testimony you state that businesses engage in wrong doing will remain fully accountable for their actions because government enforcement not private litigation deters corporate wrong doing. professor cox, i want to ask you about this. as an example he mentions that the wal-mart lilt grants are now filing with the eeoc. the last tight i checked the eeoc had a back log of 86,000
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private sector charges and the ee omb c has stated that "the private right of access to the judicial forum to adjudicate claims is an essential part of the statutory enforcement scheme. and relevance to the at&t case, a g.a.o. report found that it doesn't regulate carriers contract terms. it has a few rules that address services consumers receive. it conducts little monitoring of consumer complaints and does not enforce its billing rules for wireless carriers. professor, or professor cox, what is your understanding of the role that suits buy american citizens play in our civil justice system? are they redundant because there are already government enforcement mechanisms? >> they're hardly redoesn't nt.
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they're necessary. this has been recognized repeatly by the courts, particularly the supreme court, that we have found that congress has tightened up the ability of private litigants. so whatever judge friendly may have said five decades ago no longer applies. the idea of the strike suit i think died more than a decade ago. so we do need private litigation. we don't fund our government regulators at the level they need to be. and there's a lot of institutional creek. and the studies and studies of others have shown the current private litigation. if i may just go into this. we've studied the parallel. what are the studies? we find that the s.e.c. systemically goes after smaller
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capital with smaller losses experiencing financial distress than we find with private litigants. so those are published, out there. they pick on the weakenings. not on the strong. so you need the private and i have no reason to believe it would be any different. private litigation is a hallmark for providing access to justice in america. and that's a wonderful expression and we should all get behind it. >> thank you. just a quick question. i know that you said that this is an, at&t has a very consumer friendly and fair ooshtration system that has been said to do . how long would it have taken the conceptions to go through the process and get their $30 back? >> it could take a matter of months for them to do that. >> much quicker than the
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judicial system. >> so this would be a couple that would for $30 go through a couple of months. >> all it stakes senator is there's a form on the website. you make a complaint. the record because the economic disincentive for at&t because it has to pay a very large bonus if the case is litigated and loses, $10,000 minimum. >> no. if they say we'll give you your $30 bucks back they don't have to pay the 10,000. >> no. but if they refuse to do it. >> but they're not going to do it. they're going to give the $23530,000. and that's why this is a perfect system. both the district court said this is a perfect system. for compensating inn who complains.
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>> so they would get their $30,000 back. >> so you would get your $30 back. is that what you're saying after a month or two or three? >> i think you would file a form and it could take as quickly as a week? >> you would get your $30 back and the record shows you would get reasonable fees. >> so the conception would have gotten their fees back. >> yes. >> i don't understand that because you said in your letter that they were within their rights to charge $30. >> well. >> so why? you just testified to the senate that they would get their $30 back. why would they if you wrote the "new york times" that at&t had the right to charge them $30? i mean, i don't understand that. it seems to contradict what you say in your letter. what you say here contradicts what you wrote in the "new york times." let me see what you wrote.
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>> it's my understanding that if this was indeed a sales tax, california law allows merchants to pass the cost on to consumers only -- ok. so what i'm saying is that you're contradicting yourself. you're saying that this was a sales tax. they had the right to do this. but you're saying that they would have paid the $30 back? why? >> well, listen i've run out of time. >> can i answer? >> yes. >> i apologize for using the example as the way the arbitration system works. at&t -- >> i had a lot of question and you said they would get their $30. >> yes a tsh t settles most complaints that consumers bring at&t tries to work out a settlement because its goal is to have happy customers.

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CSPAN July 2, 2011 10:00am-2:00pm EDT

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